Pease Bell CPAs’ Post

FASB Accounting Standards Codification (ASC) 326, Current Expected Credit Loss (CECL) standard, represents a significant shift in the accounting treatment of credit losses. ASC 326 introduces a forward-looking approach to estimating and reporting credit losses on financial assets reported at amortized cost.  https://lnkd.in/gxT6ajRV

Part 2 (A)! Keeping with the latest Administrative Guidance for BEPS Pillar 2, here is Part 2: Further Guidance on the Transitional Safe Harbour (TSH) rules. It's 13 pgs so it will come in two separate posts! Overview This section covers various clarifications around the use of the TSH rules. This is largely presented as a Q&A and, where required, includes additional text to be inserted into the Guidance. The whole section covers the below: - Tested Jurisdictions - Qualified Financial Statements (Data usage and Adjustments) - Simplified ETR Calculation - Routine Profits Test - Treatment of Hybrid Arbitrage Arrangements Qualified Financial Statements Is this part relevant to you? Should be considered / reviewed for all MNCs who plan to use the TSH. Failure to meet the requirements will mean disqualification from using the TSH. Questions and Answers Q. Can different sources of qualified Financial Statements be used for the same Entity / PE and for different Entities in the same Tested Jurisdiction? A. All data for one Entity / PE must come from the same qualified source. For different Entities, the same qualified source must be used for all CEs within a Tested Jurisdiction but differences are allowed for different Tested Jurisdictions e.g., CFS of UPE used for Tested Jurisdiction A and Separate Financial Statements of each CE used for Tested Jurisdiction B. This is also true for different Accounting Methods e.g.  UPE’s CFS versus local GAAP? Q. The CbC Report uses some Qualified Financial Statements and other non-qualified financial statements, can it be a Qualified CbC Report? A. It will only be Qualified in a Tested Jurisdiction where each CE / PE in that Tested Jurisdiction uses Qualified Financial Statements. In other words, the Qualification of a CbC Report is performed separately for each Tested Jurisdiction. Q. Does CbC Report Qualification required separate Financial Statements being prepared for local statutory reporting purposes? A. No, only that the Financial Statements are prepared in accordance with an Acceptable / Authorised Financial Accounting Standard. Q. Can you make GLoBE consistent Adjustments to QFS for TSH e.g., post year-end TP adjustment or for tax treatment of intra-group payments? A. No. Only adjustments required under the Guidance e.g., for PPA, are allowed. Q. If an MNE Group isn’t required to file a CbC Report can it still use the TSH (may occur if close to the 750 million threshold due to different ways this is tested and / or currency translations). A. Yes as long as you complete section 2.2.1.3. (a) of the GLoBE information return using data from Qualified Financial Statements. Q. What constitutes a QFS for a PE? A. MNE's can use separate Financial Statements prepared by the Main Entity for financial reporting, regulatory, tax reporting or internal management purposes. https://lnkd.in/gzwsDGse

Nice of the Financial Reporting Council to give us an early Easter present! The first thing in my inbox this morning was the announcement of the revisions to FRS 102, which are effective for p/c on or after 1 Jan 2026. The biggest changes are to revenue and leasing, as previously suggested. A nice three page summary of the changes is available here: https://lnkd.in/e3FK6KEX This is obviously an area which HAT Group of Accountants will be focussing on over the coming months.

The Financial Accounting Standards Board (#FASB) has pronounced a shift in credit loss accounting within ASC 326, which is commonly referred to as Current Expected Credit Losses (#CECL). Continue reading as we answer critical questions for healthcare entities.  - To which specific types of financial assets does CECL apply? - How would this impact my day-to-day accounting? - What should I be doing now? - How will this impact financial reporting for current receivables?

FINANCIAL REPORTING CHANGES – NFPs ARE YOU READY? Changes in financial reporting have been driven by the International Accounting Standards Board's (IASB) Disclosure Initiative. The new requirements for the disclosure of material accounting policies apply to annual reporting periods beginning on, or after 1 Jan 2023 – so it is important that NFP entities understand the detail as changes will be required in financial reports for the year ended 31 December 2023. Why the need for change? The IASB has replaced “significant accounting policies" with the concept of "material accounting policy information." This nuanced alteration has far-reaching implications on how entities disclose their accounting policies, setting the stage for a more discerning financial reporting landscape. What is the impact? Determining whether accounting policy information is material demands a judicious exercise of judgment. Entities are now tasked with revisiting their accounting policy disclosures to align seamlessly with the amended schedule, ensuring compliance with the evolving regulatory framework. For a concise overview of the amendments made to AASB 101 Presentation of Financial Statements concerning the disclosure of material accounting policies by the @pitcherpartners team, click on the following link and navigate to the overview at the bottom of the page. Stay informed, stay compliant and most importantly, if you have any questions please do not hesitate to get in touch. https://lnkd.in/gZVxGMc5 #financialdisclosures #technicalaccounting #accountingstandards #nfp

NFPs often have December year ends, more so than corporates. So NFPs will be embarking on this change to 'material' accounting policy information first - see Mel's message below for more information!

Non-public businesses with fiscal year ends beginning after Dec. 15, 2022, (or interim periods during 2023) should begin preparing for the adoption of Financial Accounting Standards Board ASC Topic 326 by developing policies and procedures. Read more in this article by Brittany DiPaolo, CPA of Wiss

AS 1: Disclosure of Financial Statements Understanding AS 1, Disclosure of Financial Statements, is fundamental for accurate and transparent financial reporting. Here’s why AS 1 is crucial for every finance professional: 1. Purpose and Scope: AS 1 ensures that all essential information is disclosed in financial statements, providing a true and fair view of the company's financial position and performance. 2. Key Principles: Consistency: Financial statements should be consistent from one period to another to enable comparability. Materiality: Only material information that could influence the decisions of users should be disclosed. Full Disclosure: All significant information, including accounting policies and explanatory notes, must be provided. 3. Components of Financial Statements: AS 1 requires the following components to be included: a)Balance Sheet b)Profit and Loss Account c)Cash Flow Statement (for companies required to present it) d)Notes to Accounts, including a summary of significant accounting policies 4. Accounting Policies: AS 1 mandates that companies disclose all significant accounting policies used in the preparation of financial statements. This includes policies related to valuation of inventories, depreciation methods, revenue recognition, and more. 5. True and Fair View: The standard emphasizes the need for financial statements to present a true and fair view of the financial performance and position of the company. This is achieved through proper disclosure and adherence to accounting principles. 6. Importance of Notes to Accounts: Notes to Accounts play a critical role in providing additional information that cannot be presented in the main financial statements. This includes details about contingent liabilities, related party transactions, and changes in accounting policies. Conclusion: AS 1 lays the foundation for transparency and reliability in financial reporting. By adhering to the principles of AS 1, companies ensure that their financial statements are comprehensive, understandable, and useful for stakeholders. #AccountingStandards #AS1 #FinancialReporting #Disclosure #Finance #Accounting

Unpacking the Differences: Accruals and Provisions Seeking Clarity or a Refresher on Accruals and Provisions? Understanding the key differences between these two accounting terms is crucial for accurate financial reporting and decision-making. Let's break it down. Concept Accruals: Expenses and revenues that have been incurred but not yet paid or received. Provisions: Liabilities of uncertain timing or amount. Purpose Accruals: To match income and expenses to the period they occur. Provisions: To account for probable future expenses, write-offs, or losses. Recognition Accruals: Recognized when an expense is incurred or revenue is earned, even if not yet paid or received. Provisions: Recognized when there is a present obligation from past events, and a reliable estimate can be made. Reasons for Ambiguity Recognition Criteria: The criteria for recognizing accruals and provisions can sometimes appear similar, leading to confusion. Timing: Both accruals and provisions involve future outflows of resources. Estimations: Both require some degree of estimation or judgment. Understanding the Difference Matters Financial Reporting: Distinguishing between the two ensures that financial statements are accurate and comply with relevant accounting standards (e.g., IFRS, ASPE, US GAAP). Strategic Decisions: Accurate financial information is critical for internal and external stakeholders to make strategic business decisions. Regulations: Incorrect classification can result in noncompliance with accounting standards, leading to regulatory penalties and reputational damage. Impact of Wrong Classification Compliance: Different accounting standards and regulatory requirements govern accruals and provisions, and misclassification can lead to noncompliance (e.g., IAS 37 under IFRS & Section 3290 under ASPE). Investors Outlook: Misclassification can lead to loss of investor confidence and potential legal issues. Estimation Accruals: Estimates are generally more accurate and less subject to significant change. Provisions: Estimates are more subjective and can vary significantly based on assumptions and judgment. Timing Accruals: Typically short-term, usually within a few months. Provisions: Can be short or long-term, depending on the nature of the obligation. Other key differences? Please share Cheers to clarity in accounting! #interestingtimesahead 😀

Mere moments ago, the seven members of the Governmental Accounting Standards Board (GASB) voted unanimously to approve Statement No. 103, Financial Reporting Model Improvements, which: - Revises the requirements for management's discussion and analysis to make it more readable and understandable - Combines extraordinary items and special items into a single category of "unusual or infrequent items" - Defines operating and nonoperating revenues and expenses - Adds a section for noncapital subsidies in the proprietary funds statement of revenues, expenses, and changes in fund net position, and a new subtotal, operating income (loss) and noncapital subsidies, which is more directly comparable to operating income reported by NFP and private counterparts - Requires that the statistical section of a government engaged only in business-type activities or only business-type and fiduciary activities reflect the changes to the statement of revenues, expenses, and changes in fund net position - Requires that major component units either be shown individually in the government-wide statements, as long as it does not diminish their readability, or be presented in combining financial statements following the fund financial statements; the option to disclose condensed financial statements in notes is eliminated - Requires that budgetary comparisons be presented as required supplementary information and contain columns showing variances for original-to-final budget and final budget-to-actual results; the option to present them as basic financial statements is eliminated. The effective date is fiscal years ending June 30, 2026 and later (9-30-26, 12-31-26, 3-31-27, etc.).