With 2015 almost in the books, it’s time for most companies to focus on getting their Form 10-Ks issued and to begin planning for 2016. To help prepare for both of those tasks, we need not look much further than the comments provided by Mary Jo White, SEC chairwoman, and others during the December AICPA Conference on Current SEC and PCAOB Developments.
You can find more information about each of these topics in our 2015 blogs, and we’ll provide more information in 2016, but here are a few highlights and thoughts from the conference.
Internal Control over Financial Reporting (ICFR)
The SEC continues to note that the PCAOB inspection findings on audit of internal controls may also be an indication of problems with a company’s internal controls. As we have discussed, most of these internal control failures, at least from the company’s standpoint, are related to non-routine transactions.
Our Take Away – For non-routine transactions…evaluate expertise, develop a plan and execute the plan.
Restatements and SEC Consultations
Restatements – Many financial reporting restatements occur during the year related to debt/equity transactions, statement of cash flows classification and accounting for income taxes. We have touched on two of these three issues in blogs this year, and will provide more information in the coming months. We know debt/equity transactions will continue to be complicated as both private equity and venture capital firms look to increase investments in 2016. And hey, accounting for income taxes will never be easy.
Our Take Away – Evaluate competencies and develop plans accordingly.
SEC Consultations – We are making progress. Companies are reaching out to the SEC to consult on matters including accounting for business combinations, revenue recognition and segment reporting.
Our Take Away – When in doubt seek input from an expert and double check with our friends in DC.
New Revenue Recognition Standard
Most companies continue to disclose that the impact of the new standard is not known. The SEC noted companies may want to consider disclosing when their assessment will be completed.
Our Take Away – This is a completely new standard on revenue recognition. All companies will be impacted at some level. For 2016, develop an implementation plan and allocate appropriate resources. Use help from outside advisors if your staff is overwhelmed.
This group continues to have things added to their plate. From cybersecurity to government regulations, audit committees are often given the task of leading the company in these areas. Speakers at the conference emphasized the need for continued audit committee focus on SEC and exchange-listing requirements.
Our Take Away – Make sure your audit committee members have the time necessary to serve. As many members serve more than one company, time and not expertise, is becoming more of an issue.
We hope you will find the above summary helpful as you wrap up 2015 and plan for next year. Don’t forget, we are always here to help through those rough spots.
Thanks to all our readers! Happy New Year!
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