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Filing Deadlines Postponed to Serve as Relief for COVID-19 Pandemic

Leases and Revenue Recognition – FASB to Propose Delay in Effective Dates for Private Companies

Credit Losses – IASB Releases Guidance on Application of IFRS 9 During Time of Uncertainty Due to COVID-19 Pandemic

Audit Matters – AICPA Issues FAQs on Audit Matters and Auditor Reporting Related to COVID-19

SEC Staff Speech, Staff Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns

SEC Staff Speech, Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 by Sagar Teotia, Acting Chief Accountant, Office of the Chief Accountant

SEC Staff Speech, Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns

SEC Staff Speech, Topic No. 9: Coronavirus (COVID-19)

SEC Staff Speech, SEC Staff Provides Guidance to Promote Continued Shareholder Engagement, Including at Virtual Annual Meetings, for Companies and Funds Affected by the Coronavirus Disease 2019 (COVID-19)

Exchange Act Rules – SEC Staff Updates Compliance and Disclosure Interpretation

RECORDING AVAILABLE: MaloneBailey Hosts Virtual Webinar on April 7, 2020: The CARES Act - Your Complete Guide on Tax Relief, Paycheck Protection Program & Families First Coronavirus Response Act.

Economic Impact Payments: What You Need to Know

IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19

IRS issues warning about Coronavirus-related scams; watch out for schemes tied to economic impact payments

US Chamber of Commerce: Small Business Guide and Checklist for Coronavirus Emergency Loans

CARES Act: President Signs $2.2 Trillion Bill to Support Economy During Virus Pandemic

SEC Provides Conditional Regulatory Relief and Assistance for Companies Affected by the Coronavirus Disease 2019 (COVID-19)

Federal Relief for Taxpayers Affected by Ongoing COVID-19 Pandemic

Articles

Filing Deadlines Postponed to Serve as Relief for COVID-19 Pandemic
Written by Tabitha Ford, Tax Senior, MaloneBailey

Summary - The Internal Revenue Service (IRS) has provided various relief options to mitigate the economic destruction caused by the ongoing COVID-19 pandemic. The most significant relief option is the postponed filing deadline provided to affected taxpayers defined in IRS Notice 2020-23 as anyone who requires a specified time-sensitive action to be performed on or after April 1, 2020 and before July 15, 2020.

According to the notice, specified time-sensitive actions also include an investment at the election of a taxpayer due to be made during the 180-day period described in 1400Z-2(a)(1)(A) of the code. For an affected taxpayer with respect to specified filing and payment obligations, the due date for filing specified forms and making specified payments is automatically postponed to July 15, 2020 and does not require any action to be taken. Those that need additional time to file may file the appropriate extension form by July 15, 2020; however, the extended due date will remain the original statutory or regulatory extension date.

Specified returns and payments qualified for the postponed filing deadline:

  • Individual income tax returns and payments: Form 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR and 1040-SS
  • Calendar year and fiscal year corporate income tax returns and payments: Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-S, 1120-SF
  • Calendar year and fiscal year partnership returns: Form 1065 and Form 1066
  • Estate and Trust Income tax returns and payments: Form 1041, 1041-N, 1041-QFT
  • Gift, Estate and Generation-Skipping tax payments and return filings: Form 709, 706-NA, 706-A, 706-QDT, 706-GS(T)M 706-GS(D)M 706-GS(D-1)
  • Information regarding beneficiaries acquiring property from a decedent: Form 8971
  • Exempt organization Business income tax returns and payments: Form 990-T
  • Excise tax payments on investment income and return filings: Form 990-PF, 4720
  • Quarterly estimated income tax payments: Form 990-W, 1040-ES, 1040-ES (NR), 1040-ES (PR), 1040-ES, 1120-W

The relief includes not only the specified forms, but also the schedules, elections and other forms that are required to be filed along with the specified form. Additionally, the calculation of interest, penalties or addition to tax for failure to file or pay will be disregarded until July 16, 2020.

Leases and Revenue Recognition – FASB to Propose Delay in Effective Dates for Private Companies

Summary - As discussed in its “Summary of Board Decisions” publication, the FASB met on April 8, 2020. After the meeting, FASB Chair Russell G. Golden has issued the following statement:

“The FASB held a public meeting to approve measures intended to provide stakeholders with accounting relief and clarity during the COVID-19 crisis.

In the coming days, the FASB will issue a proposal to provide certain private companies and not-for-profit organizations with an optional, one-year effective date delay of the leases standard. Stakeholders will have a 15-day comment period from the time of issuance to review and provide comments on the proposal. The FASB will also add a project to its research agenda to see if there are opportunities to provide revenue recognition implementation expedients to franchisors. While that project is ongoing, the private company franchisors will also be given a one-year deferral for the revenue recognition standard.

Additionally, the FASB staff soon will issue a leases question-and-answer document to help stakeholders account for the rapid, unprecedented lease concessions lessors are seeking to provide tenants during the pandemic. The staff also addressed implementation questions about other crisis-related issues, including interest income and loan payment holidays, hedging, and fair value accounting. The staff also noted that they have received questions related to accounting for loans from the Small Business Administration and that they will work with stakeholders to provide accounting clarity in that area as well. This information will be memorialized in FASB’s upcoming summary of tentative Board decisions (TBDs) and meeting minutes to be posted to the FASB website.

We also announced that we will temporarily suspend issuance of other public exposure documents and will defer work that requires public outreach on other technical agenda projects to focus on supporting stakeholders as they navigate the impact of the crisis. Consequently, we have also decided to postpone our May 18, 2020 public leases roundtable meeting until a future date.

Finally, it’s important to note that we recognize that there are other standards with effective dates of 2022 and beyond—and that companies implementing them are also suffering from a dislocation of accounting staff and a reallocation of resources. I want to assure them that the FASB is committed to understanding how the COVID-19 crisis is impacting their transition plans, and we will continue to address issues at a future Board meeting, including addressing the need for more time related to adoption.

I would like to thank my fellow FASB members and the entire FASB technical staff for their diligent work in recent weeks to support our stakeholders. We will continue to closely monitor questions and concerns from our stakeholders, and we encourage them to continue to share them with us so we can help them during this difficult time. Questions can be submitted through the FASB’s Technical Inquiry Service.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Credit Losses – IASB Releases Guidance on Application of IFRS 9 During Time of Uncertainty Due to COVID-19 Pandemic

Summary - The International Accounting Standards Board (IASB) has released the document, IFRS 9 and COVID-19—Accounting for Expected Credit Losses Applying IFRS 9 Financial Instruments in the Light of Current Uncertainty Resulting from the COVID-19 Pandemic.

The document responds to questions regarding the application of International Financial Reporting Standard (IFRS) 9, Financial Instruments, during this period of enhanced economic uncertainty arising from the COVID-19 pandemic. The document was prepared for educational purposes, highlighting requirements within IFRS 9 that are relevant for companies considering how the pandemic affects their accounting for expected credit losses (ECL). It does not change, remove nor add to, the requirements in IFRS 9. The IASB intends it to support the consistent and robust application of IFRS 9.

The IASB developed IFRS 9 in response to requests by the G20 and others to provide more forward-looking information about loan losses than the predecessor Standard and to give transparent and timely information about changes in credit risk.

The document acknowledges that estimating ECL on financial instruments is challenging in the current circumstances and highlights the importance of companies using all reasonable and supportable information available, historic, current and forward-looking to the extent possible, when determining whether lifetime losses should be recognized on loans and in measuring ECL.

The document reinforces that IFRS 9 requires judgment in application and does not provide bright lines nor a mechanistic approach in accounting for ECLs. Accordingly, companies may need to adjust their approaches to forecasting and determining when lifetime losses should be recognized to reflect the current environment.

The IFRS Foundation and the IASB continue to work in close cooperation with regulators and others regarding the application of IFRS 9, and the document encourages companies to consider guidance provided by prudential and securities regulators.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Audit Matters – AICPA Issues FAQs on Audit Matters and Auditor Reporting Related to COVID-19

Summary - The AICPA has published guidance in the form of a frequently asked questions (FAQs) file, FAQs — Audit Matters and Auditor Reporting Issues Related to COVID–19.

Purpose of FAQs:

The AICPA staff developed the FAQs to assist practitioners performing audit engagements and preparers of financial statements. The guidance is not authoritative and does not apply to preparation of and issuance of audit reports within the jurisdiction of the PCAOB, nor does it on accounting, disclosure, and reporting nuances for public companies.

The AICPA intends to update the FAQs as it collects further questions.

Topics Covered by the FAQs:

  • The various questions and answers are grouped into the following categories as related to or due to the impact of COVID-19:
  • General Accounting, Auditing and Reporting matters, including risks and uncertainties, subsequent events, and going concern;
  • Audit and Auditor Reporting Specific Matters, including inventory observations, fraud inquiries, access to books and records, internal control, use of external confirmations, planning meetings, management representation letters, and emphasis of matter paragraphs and types of auditor’s reports; and
  • Accounting and Financial Reporting Specific Matters, particularly financial reporting considerations of the items as related to COVID-19, including fair value, asset impairments, unusual or infrequent events, and deferred tax assets.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Staff Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns

Summary - The SEC has updated its previously issued guidance from its staff to assist public companies, investment companies, shareholders, and other market participants affected by COVID-19 with their upcoming annual shareholder meetings. The guidance is designed to facilitate the ability of companies to hold these important meetings, including through the use of technology, and engage with shareholders while complying with the federal securities laws.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 by Sagar Teotia, Acting Chief Accountant, Office of the Chief Accountant

Summary - SEC Chief Accountant Sagar Teotia issued a Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19. Teotia indicates that the SEC’s Office of the Chief Accountant (OCA) is “taking a proactive approach and have been engaged with stakeholders across the financial reporting ecosystem – e.g., preparers, auditors, audit committee members, investors, standard setters, and other regulators – on issues related to current market developments.” Highlights of Teotia’s statement include:

OCA recognizes that the accounting and financial reporting implications of COVID-19 may require companies to make significant judgments and estimates. Certain judgments and estimates can be challenging in an environment of uncertainty. OCA has consistently not objected to well-reasoned judgments that entities have made, and we will continue to apply this perspective.

The recently passed Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). OCA has received inquiries from preparers and auditors where the preparer has concluded that election of the narrow and limited options in Sections 4013 and 4014 of the CARES Act would be deemed to be “in accordance with GAAP.” For those entities that are eligible for, and elect to apply, either of Sections 4013 or 4014 of the CARES Act, the OCA staff would not object to the conclusion that this is in accordance with GAAP for the periods for which such elections are available. Section 4013 of the CARES Act provides a temporary relief to financial institutions (including credit unions) from GAAP as relates to troubled debt restructurings. Section 4014 of the CARES Act provides optional temporary relief to financial institutions (including credit unions) from the GAAP impacts of CECL (current expected credit loss) standards.

OCA remains actively focused on auditor independence matters in these unprecedented times. OCA indicates that auditor independence is foundational to the credibility of the financial statements and is a shared responsibility among audit committees, management, and their auditors. Management and audit committees should be aware of how an auditor independence violation may affect the company’s required SEC filings.

The challenges associated with many of the accounting issues in the current environment also exist internationally. OCA is actively engaged in discussions with the IASB on the impact of COVID-19, including through its involvement as the vice-chair of IOSCO’s Committee 1 on Issuer Accounting, Audit and Disclosure. Committee 1 is dedicated to improving the development of accounting and auditing standards, and enhancing the quality and transparency of the information that investors receive from listed companies, including financial institutions.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns

Summary - The SEC has issued Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns. The SEC staff published this statement in response to inquiries from persons and entities subject to Regulation S-T regarding the authentication document retention requirements under Rule 302(b) in light of health, transportation, and other logistical issues raised by the spread of COVID-19. Given the public health and safety concerns related to COVID-19, the SEC staff published the statement to those affected by COVID-19 regarding Rule 302(b) of Regulation S-T.

Rule 302(b) of Regulation S-T requires that each signatory to documents electronically filed with the SEC under the federal securities laws “manually sign a signature page or other document authenticating, acknowledging or otherwise adopting his or her signature that appears in typed form within the electronic filing.” Such documents must be executed before or at the time the electronic filing is made. Further, electronic filers must retain such documents for a period of five years and furnish copies to the SEC or its staff upon request.

The SEC staff expects all persons and entities subject to Regulation S-T to “comply with the requirements of Rule 302(b) to the fullest extent practicable based on their particular facts and circumstances. However, the staff understands that some persons and entities subject to Regulation S-T may experience difficulties satisfying these requirements due to circumstances arising from COVID-19.” In light of these difficulties, the SEC staff will not recommend the SEC take enforcement action with respect to the requirements of Rule 302(b) if:

A signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course pursuant to Rule 302(b);

Such document indicates the date and time when the signature was executed; and

The filer establishes and maintains policies and procedures governing this process.

The signatory may also provide to the filer an electronic record (such as a photograph or pdf) of such document when it is signed.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Topic No. 9: Coronavirus (COVID-19)

Summary - The SEC has issued CF Disclosure Guidance Topic 9: Coronavirus (COVID-19), which provides guidance for consideration of COVID-19 (coronavirus). CF Disclosure Topic 9 provides guidance on these broad topics:

  • Assessing and Disclosing the Evolving Impact of COVID-19;
  • Need to Refrain from Trading Prior to Dissemination of Material Non-Public Information; and
  • Reporting Earnings and Financial Results.

Corp Fin “has been monitoring how companies are reporting the effects and risks of COVID-19 on their businesses, financial condition, and results of operations and is providing the guidance as companies prepare disclosure documents during this uncertain time.” The guidance encourages timely reporting while recognizing that it may be difficult to assess or predict with precision the broad effects of COVID-19 on industries or individual companies.

As events evolve, Corp Fin has indicated that it will provide additional guidance, if appropriate. Companies and their representatives are encouraged to contact Corp Fin with questions or if they believe there are additional areas where guidance or temporary relief may be necessary.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, SEC Staff Provides Guidance to Promote Continued Shareholder Engagement, Including at Virtual Annual Meetings, for Companies and Funds Affected by the Coronavirus Disease 2019 (COVID-19)

Summary - The SEC issued guidance from its staff to assist public companies, investment companies, shareholders, and other market participants affected by COVID-19 with their upcoming annual shareholder meetings. The guidance is designed to facilitate the ability of companies to hold these important meetings, including through the use of technology, and engage with shareholders while complying with the federal securities laws.

The SEC indicated that many “public companies and investment companies are required to hold annual meetings of security holders, with the federal securities laws requiring the delivery of proxy materials to the voting shareholders. The spread of COVID-19 has affected the ability to hold these in-person meetings due to health, transportation, and other logistical issues. In light of these difficulties, the staff guidance provides regulatory flexibility to companies seeking to change the date and location of the meetings and use new technologies, such as ‘virtual’ shareholder meetings that avoid the need for in-person shareholder attendance, while at the same time ensuring that shareholders and other market participants are informed of any changes.”

The guidance provides that affected parties can announce in filings made with the SEC the changes in the meeting date or location or the use of “virtual” meetings without incurring the cost of additional physical mailing of proxy materials. The guidance also encourages companies to provide shareholder proponents with alternative means, such as by telephone, to present their proposals at the annual meetings in light of the difficulties that shareholder proponents face due to COVID-19.

The SEC will continue to closely monitor the impact of COVID-19 on investors and the capital markets. Companies, shareholders, and other market participants are encouraged to contact the SEC staff with any questions and concerns.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Exchange Act Rules – SEC Staff Updates Compliance and Disclosure Interpretation

Summary - The staff in the Division of Corporation Finance (Corp Fin) has updated its Compliance and Disclosure Interpretation (C&DI), Exchange Act Rules (Questions 135.12 and 135.13). Corp Fin has updated this C&DI to reflect SEC and SEC staff guidance in response to COVID-19 (coronavirus). Guidance is provided on the following two questions:

  • A registrant expects that due to COVID-19 it will be unable to file a report of the type covered by Rule 12b-5 on timely basis without incurring an unreasonable effort or expense. It is uncertain as to its ability to file the required report within the applicable 12b-25(b)(2)(ii) period. Should the registrant instead furnish a report on Form 8-K or 6-K, as applicable, relying on the COVID-19 Order (Release No. 34-88465 (March 25, 2020))?
  • Can a registrant that filed a Form 12b-25 subsequently rely on the COVID-19 Order (Release No. 34-88465 (March 25, 2020)), to extend the filing deadline for the subject report?

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

RECORDING AVAILABLE: MaloneBailey Hosts Virtual Webinar on April 7, 2020: The CARES Act - Your Complete Guide

Summary - On April 7, 2020, MaloneBailey delivered a virtual presentation on the The CARES Act - Your Complete Guide on Tax Relief, Paycheck Protection Program & Families First Coronavirus Response Act.

A recording of the English version of the presentation is available here.

A recording of the Mandarin version of the presentation is available here.

Key Topics Covered:

  • Introduction, clarifications and tax considerations on the forgivable SBA Loan under the CARES Act Paycheck Protection Program
  • Introduction of COVID-19 paid leave for workers and tax credits for small businesses under the Families First Coronavirus Response Act
  • Review of other stimulus payments and tax credits

Kindly note the information provided in the presentation is based on information available as of April 7, 2020. Information is changing regularly so we encourage you to check and verify information.

Economic Impact Payments: What You Need to Know

Summary - Based on the 2019 or 2018 income tax returns filed with the IRS, the IRS will automatically calculate and distribute the Economic Impact Payments to individuals. No action is required for most taxpayers. These payments will be directly deposited into the bank account reflected on the returns filed. For taxpayers who did not submit banking information on their tax returns, the IRS will develop a web-based portal to collect banking information.
For more information, click here.

IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19

Any businesses which do not take small business loans may claim Employee Retention Credit. The credit amount is 50% of qualifying wages (up to $10,000 for each employee) paid during March 13 and December 31, 2020.
For more information, click here.

IRS issues warning about Coronavirus-related scams; watch out for schemes tied to economic impact payments

Summary - Be careful! Scam calls and emails may come to you with a mask of “stimulus payment”.
For more information, click here.

US Chamber of Commerce: Small Business Guide and Checklist for Coronavirus Emergency Loans

Summary - The US Chamber of Commerce has provided a resource, the Small Buisness Guide and Checklist for Coronavirus Emergency Loans, which covers important questions you may be asking. According to this publication, "The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward."
To review the complete guide, click here.

CARES Act: President Signs $2.2 Trillion Bill to Support Economy During Virus Pandemic

Summary - The Act looks to make significant impact on the economy by providing loan forgiveness, supporting small businesses, enhancing unemployment insurance, and providing federal loans to industries severely impacted by the pandemic. In addition, it provides tax relief and tax incentives to individuals and businesses alike. The majority of the tax relief is designed to increase liquidity in the economy, largely through the relaxation of limitations on business deductions and the deferral of taxes, but also with the introduction of recovery rebates for individuals.

For more information about the CARES Act, click here

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Provides Conditional Regulatory Relief and Assistance for Companies Affected by the Coronavirus Disease 2019 (COVID-19)

Summary - Due to the challenges certain companies may face due to the ongoing coronavirus pandemic, the Securities and Exchange Commission is providing conditional regulatory relief to certain publicly traded company filing obligation under the federal securities law. U.S. companies located in affected areas and companies with operations in those regions may qualify for this relief.

The SEC issued a conditional order that provides publicly traded companies with a 45-day extension to file certain disclosure reports that would otherwise be due between March 1 and April 30, 2020. Among other conditions, companies must disclose through current reports and explanation of why this relief is necessary in their particular situation. The Commission may extend the time period for the relief, add conditions, or provide additional relief as circumstances warrant.

Companies and their representatives are encouraged to contact SEC staff with questions or concerns regarding this information.

For more information, click here.

Federal Relief for Taxpayers Affected by Ongoing COVID-19 Pandemic

Summary - On March 20, 2020 the IRS issued Notice 2020-18 regarding relief for taxpayers affected COVID-19. Here is a brief summary as well as clarifications on the relief:

Relief:

  • The due date for federal income tax returns due April 15, 2020 is automatically postponed to July 15, 2020;
  • The due date for making 2019 federal income tax payments due April 15, 2020 is automatically postponed to July 15, 2020;
  • The due date for making 2020 Q1 federal income tax payments due April 15, 2020 is automatically postponed to July 15, 2020;
  • There is no limitation on the amount of the federal income tax payment that may be postponed.

Clarifications:

The relief covered in this notice is solely for federal income tax return and payments due on April 15, 2020:

  • If you are a fiscal year-end taxpayer and if your federal income tax return is originally due between April 15 and July 15, your due date of federal income tax return and federal income tax payment are not postponed;
  • The due date for making 2020 Q2 federal income tax payments due June 15, 2020 is not postponed;
  • No extension is provided in this notice for the payment of any other type of federal tax (e.g. payroll taxes);
  • No extension is provided in this notice for the filing of any federal information return (e.g. form 941 employer’s quarterly federal tax return)
  • Some state tax payments and state tax return due dates have been postponed according to each state’s decision. Please see attachment for a list of state relief.

On the other hand, a payroll tax credit is available for businesses which incur Paid Sick Leave costs due to the COVID-19.

For more information, click here.

For a chart on Tax Filing and Tax Payment Relief for Coronavirus/COVID-19 Pandemic as of 3/26/20, click here.