CPAJ News Briefs: FASB, AICPA, PCAOB

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FASB News

Improved supplier financing program disclosure rule is credit positive, says Moody’s

The FASB’s recent decision to make changes to supplier financing program obligation disclosure, also known as reverse factoring, “is a much-needed improvement, as there is currently a lack of explicit guidance” , noted Moody’s Investors Service in an accounting focus. This comes as credit rating agencies like Moody’s, along with other analysts and investors, have called on the FASB to increase disclosure of qualitative and quantitative information about vendor financing programs. The Big Four CPA firms also asked the board to address some aspects of program accounting and disclosure. The FASB first issued an exposure draft in December 2021 and on July 20, 2022 decided to adopt revisions to the existing rules. The updated standard, which requires companies to disclose specified “key terms,” will be released in the fall. Companies that use reverse factoring must begin disclosing additional information, including payment terms, starting January 1, 2023 if vendor financing programs pose liquidity risks,” according to Moody’s Sector Comment published on July 25, 2022. It was written by David Gonzales, VP-Senior Accounting Analyst, member of the FASB’s Financial Accounting Standards Advisory Council, and Alastair Drake, SVP-Senior Accounting Analyst.

AICPA News

Auditing Standards Board Votes to Release Updated Compliance Auditing Standard

The AICPA’s Auditing Standards Board (ASB) voted to release a final standard for compliance audits at a July 19 meeting. to other auditing standards, including audit evidence and risk assessment. Thus, the SBA has made conforming changes. Statement on Auditing Standards (SAS) 148, AU-C Section 935 Amendmentmodifies SAS 117, Compliance Audits. SAS 142, Audit evidence (AU-C section 500), was issued July 2020. SAS 145, Understand the entity and its environment and assess the risks of material misstatement (AU-C Section 315), was published in October 2021. The amendment to the appendix relating to AU-C Section 501, “Evidence Evidence – Specific Considerations for Selected Items”, comes into effect effective for compliance audits for fiscal years ending on or after December 15, 2022, to align with the effective date of SAS 142. All other amendments to SAS 148 are effective for compliance audits. compliance for fiscal years ending on or after December 15, 2023, according to Ahava Goldman, associate director for auditing and certification standards for the Association of International Certified Professional Accountants. “The ASB will further consider comments received on the exposure draft at its October 2022 meeting,” Goldman noted.

PCAOB News

PCAOB Considers Adding Audit Quality Indicators Project to Agenda

Following requests from its investor advisors, the PCAOB is considering resuming an old project abandoned several years ago due to resistance from audit firms (and, to a lesser extent, audit committees). The project in question is the development of audit quality indicators (AQIs) as part of a broader effort to improve audit quality. “I really appreciate this question from Lynn [Turner]. Many of our stakeholders, as you know, have indicated that the audit quality indicator is of great interest to them, and we are exploring options to add a standards project or an AQI-related research project to our order. of the day, and I hope to provide an update very soon,” PCAOB Chair Erica Williams said at a July 28 event commemorating the 20th anniversary of the Sarbanes-Oxley Act of 2002, which created the audit regulatory council to better oversee the audit profession in the wake of contemporary accounting scandals at Enron, WorldCom, and others. Over the years, members of the board’s Investor Advisory Group had pressed the PCAOB to move forward with the stalled project. Now, with new leadership on the board, AQIs could become a reality.

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