Certified Public Accounting Firm

COVID-19 - Page 1

Articles On This Page

AICPA Coronavirus (COVID-19) Resource Center NEW!

What People Really Want to Know About Economic Impact Payments NEW!

Leases – FASB Issues Staff Q&A on Accounting for Leases During Covid-19 NEW!

COVID-19 – SEC Staff Provides Guidance on Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns  NEW!

Leases – IASB Publishes Guidance on IFRS 16 and COVID-19 Rent Concessions NEW!

Hedge Accounting – FASB Issues Staff Q&A on Hedge Accounting During COVID-19 Pandemic NEW!

COVID-19 – Corp Fin Provides Guidance for Certain Paper Documents in Light of COVID-19 Concerns NEW!

COVID-19 – CAQ Publishes Resource on Managing Fraud Risk, Culture, and Skepticism During COVID-19 NEW!

Going Concern – CAQ Publishes Resource on Management and Auditor Responsibility for Going Concern During COVID-19 NEW!

Interim Financial Statements – CAQ Publishes Resource on Interim Financial Statements During COVID-19  NEW!

Auditor and Audit Committee Considerations – CAQ Publishes Resource on Key Auditor and Audit Committee Considerations During COVID-19  NEW!

COVID-19 – Corp Fin Publishes COVID-19 Related FAQs  NEW!

Crowdfunding – SEC Provides Temporary, Conditional Relief to Allow Expedited Crowdfunding Offerings NEW!

Liabilities – IASB Proposes Deferring IAS 1 Amendments’ Effective Date Due to COVID-19 NEW!

SEC Enforcement – SEC Co-Director Discusses SEC Enforcement During COVID-19  NEW!

GASB Standards – GASB Postpones Effective Dates of Upcoming Pronouncements NEW!

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

AICPA Coronavirus (COVID-19) Resource Center

Summary - The AICPA is taking the coronavirus (COVID-19) very seriously. They are continually monitoring the virus’ impact on members, staff, exam candidates, students and the profession. The institute is working around the clock to get information into the hands of their members as quickly as possible. Understandably, in doing so, their first priority is to provide high level overviews, and then to create tools and resources to support the new information. As these tools may be ready slightly after their initial overview, please be sure to check this website on a regular basis.

To access the AICPA Coronavirus (COVID-19) Resource Center, please click here.

What People Really Want to Know About Economic Impact Payments

Click here to read the complete article on the IRS website.

Summary - IRS.gov has answers to many questions people may have about their Economic Impact Payment. Here are answers to some of the top questions people are asking about these payments.

Is this payment considered taxable income?

No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 tax return next year. A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.

Can people who receive a Form SSA-1099 or RRB-1099 use Get My Payment to check their payment status?

Yes, they will be able to use Get My Payment to check the status of their payment after verifying their identity by answering the required security questions.

If someone's bank account information has changed since they filed their last tax return, can they update it using Get My Payment?

To help protect against potential fraud, the tool also does not allow people to change direct deposit bank account information already on file with the IRS.

If the IRS issues a direct deposit based on the account information that the taxpayer provided on their tax return and the bank information is now invalid or the account has been closed, the bank will reject the deposit. The agency will then mail payment as soon as possible to the address they have on file. Get My Payment will be updated to reflect the date a payment will be mailed. It will take up to 14 days to receive the payment, standard mailing time.

Where can people get more information?

Taxpayers who are required to file a tax return, can go to IRS Free File to file electronically. If they aren't required to file, they should go to the Non-Filers: Enter Payment Info Here tool and submit their information to receive an Economic Impact Payment.

For the complete lists of FAQs, visit the Economic Impact Payment and the Get My Payment tool pages on IRS.gov. The IRS updates these FAQs regularly.

The IRS encourages people to share this information with family and friends.

The article above is pulled directly from the IRS website. Click here for more information.

Leases – FASB Issues Staff Q&A on Accounting for Leases During Covid-19

Summary - The FASB issued a question-and-answer document to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of the COVID-19 pandemic.

Many lessors are, or will be, providing lease concessions to tenants impacted by the economic disruptions caused by the pandemic. As part of the FASB’s continuing commitment to educate stakeholders and to provide interpretive guidance on accounting for lease concessions, the FASB staff has developed this Q&A to respond to some frequently asked questions and to help stakeholders navigate the guidance in this area. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 Leases (or Topic 840 Leases) to those contracts.

The FASB staff will continue to monitor this area to determine whether to provide additional clarification in the future.

For more information, click here.

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

COVID-19 – SEC Staff Provides Guidance on Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns

Summary - The staff of the SEC’s Division of Corporation Finance (Corp Fin) has indicated that it “is aware of logistical difficulties of submitting Forms 144 in paper given the spread of coronavirus disease 2019 (COVID-19). In light of ongoing health and safety concerns related to COVID-19, the staff is providing the following statement to those affected by COVID-19 regarding Forms 144. This staff statement is temporary and covers those who submit Forms 144 for the period from and including April 10, 2020 to June 30, 2020.”

Corp Fin indicates that it will not recommend enforcement action to the SEC if Forms 144 filed in paper under Rules 101(b)(4) or 101(c)(6) of Regulation S-T are submitted via email in lieu of mailing or delivering the paper form to the SEC if the filer or submitter attaches a complete Form 144 as a PDF attachment to an email sent to PaperForms144@SEC.gov.

If the filer or submitter is unable to provide a manual signature on the Form 144 submitted by email, Corp Fin will not recommend enforcement action to the SEC if the filer or submitter provides a typed form of signature in lieu of the manual signature and:

  • The 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 submission and provides such document, as promptly as practicable, upon request by Corp Fin;
  • Such document indicates the date and time when the signature was executed; and
  • The filer or submitter (with the exception of natural persons) establishes and maintains policies and procedures governing this process.

Filers and submitters may continue to submit Forms 144 to the SEC mailroom. There may, however, be delays in the processing of such documents

For more information, click here.

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

Leases – IASB Publishes Guidance on IFRS 16 and COVID-19 Rent Concessions

Summary - The IASB issued the document, IFRS 16 and COVID-19—Accounting for COVID-19-Related Rent Concessions Applying IFRS 16 Leases. The document responds to questions on application of IFRS 16 to rent concessions granted as a result of the COVID-19 pandemic.

The IASB prepared the document for educational purposes. It highlights the requirements within IFRS 16 and other IFRSs that are relevant for companies considering how to account for rent concessions granted as a result of the covid-19 pandemic.

The guidance does not change, remove, nor add to, the requirements in IFRS 16 or other IFRSs. It is intended to support the consistent and robust application of IFRS 16.

For more information, click here.

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

Hedge Accounting – FASB Issues Staff Q&A on Hedge Accounting During COVID-19 Pandemic

Summary - The FASB has issued a question-and-answer document (Q&A) that responds to frequently asked questions about the disruptive effects of COVID-19 on cash flow hedge accounting.

FASB Accounting Standards Codification® Topic 815, Derivatives and Hedging, provides guidance on when to discontinue cash flow hedge accounting and when and how to reclassify amounts deferred in accumulated other comprehensive income to earnings.

In recent weeks, stakeholders have asked how the postponement or cancellation of forecasted transactions related to the effects of the COVID-19 pandemic should be considered when applying cash flow hedge accounting under Topic 815. The FASB staff developed this Q&A to provide guidance on this unique and evolving situation, based on the information and feedback they’ve received to date.

The FASB staff will continue to monitor questions and communicate with stakeholders through additional statements, technical inquiries, and other means, as appropriate.

For more information, click here.

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

COVID-19 – Corp Fin Provides Guidance for Certain Paper Documents in Light of COVID-19 Concerns

Summary - The staff of the Division of Corporation Finance (Corp Fin) has published guidance for certain paper documents in light of COVID-19. Corp Fin indicates that it is aware of logistical difficulties submitting certain forms (other than Forms 144) in paper given the spread of COVID-19. Corp Fin has previously issued guidance on Forms 144.

This staff statement is temporary and covers those who submit the following forms for the period from and including April 23, 2020 to June 30, 2020:

  • Annual reports to security holders furnished by foreign private issuers on Form 6-K pursuant to Rule 101(b)(1) of Regulation S-T;
  • Forms 11-K pursuant to Rule 101(b)(3) of Regulation S-T;
  • Periodic reports and distribution reports filed by certain international development banks pursuant to Rule 101(b)(5) of Regulation S-T;
  • Reports or other documents furnished by foreign private issuers on Form 6–K pursuant to Rule 101(b)(6) of Regulation S-T; and
  • Unabridged foreign language documents and English translations of a foreign government’s or its political subdivision’s latest annual budget pursuant to Rules 306(b) and (c) of Regulation S-T.

Corp Fin will not recommend enforcement action to the SEC “if the above documents are submitted via email in lieu of mailing or delivering the paper document to the SEC if the filer attaches a complete document, including any required exhibits, as PDF attachments to an email sent to CorporationFinancePaperForms@SEC.gov.”

If the filer is unable to provide a manual signature on a document submitted by email, the staff will not recommend enforcement action to the SEC if the filer provides a typed form of signature in lieu of the manual signature and:

  • The 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 email submission and provides such document, as promptly as practicable, upon request by the Division or other SEC staff;
  • Such document indicates the date and time when the signature was executed; and
  • The filer establishes and maintains policies and procedures governing this process.

Filers may continue to submit these documents to the SEC mailroom. There may, however, be delays in the processing of such documents.

For more information, click here.

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

COVID-19 – CAQ Publishes Resource on Managing Fraud Risk, Culture, and Skepticism During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Managing Fraud Risk, Culture, and Skepticism During COVID-19. This resource is intended to heighten awareness of the risk for fraud and misconduct that might occur inside an organization during, or as a result of, this crisis. Even if most people behave ethically, members of the financial reporting supply chain should review the controls, processes, and procedures that they have in their arsenals: a robust crisis and fraud risk management plan, a healthy dose of skepticism, and a strong culture of integrity.

For more information, click here.

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

Interim Financial Statements – CAQ Publishes Resource on Interim Financial Statements During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Interim Financial Statements Included in Form 10-Q COVID-19 Considerations. This resource is intended to provide a high-level overview of the auditor’s responsibilities related to the interim financial statements included in Form 10-Q.

For more information, click here.

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

Auditor and Audit Committee Considerations – CAQ Publishes Resource on Key Auditor and Audit Committee Considerations During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Key Auditor and Audit Committee Considerations. This resource is intended to provide high-level financial reporting considerations for auditors and audit committees as certain audits near completion, quarterly reviews are occurring, and during planning for 2020 audits.

For more information, click here.

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

COVID-19 – Corp Fin Publishes COVID-19 Related FAQs

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published COVID-19 Related FAQs. These FAQs provide guidance specific to financial reporting guidance related to the COVID-19 pandemic. The FAQ provides guidance on: (1) implementing the SEC’s guidance with the COVID-19 Order modifying exemptions from the reporting and proxy delivery requirements for public companies; and (2) questions related to registration statements on Form S-3.

For more information, click here.

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

Crowdfunding – SEC Provides Temporary, Conditional Relief to Allow Expedited Crowdfunding Offerings

Summary - The SEC announced that it is providing temporary, conditional relief for established smaller companies affected by COVID-19 that may look to meet their urgent funding needs through a Regulation Crowdfunding offering. According to the SEC, these actions will expedite the offering process for eligible companies by providing relief from certain rules with respect to the timing of a company's offering and the financial statements required. To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief.

The temporary rules are intended to expedite the offering process for smaller, previously established companies directly or indirectly affected by COVID-19 that are seeking to meet their funding needs through the offer and sale of securities pursuant to Regulation Crowdfunding.The temporary rules provide flexibility for issuers that meet certain eligibility criteria to assess interest in a Regulation Crowdfunding offering prior to preparation of full offering materials, and then once launched, to close such an offering and have access to funds sooner than would be possible in the absence of the temporary relief.

The temporary rules also provide an exemption from certain financial statement review requirements for issuers offering more than $107,000 but not more than $250,000 in securities in reliance on Regulation Crowdfunding within a 12-month period.The relief will apply to offerings launched between the effective date of the temporary rules (publication in the Federal Register) and August 31, 2020.

For more information, click here.

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

Liabilities – IASB Proposes Deferring IAS 1 Amendments’ Effective Date Due to COVID-19

Summary - The IASB has proposed to defer by one year the effective date of Classification of Liabilities as Current or Non-current, which amends International Accounting Standard (IAS) 1, Presentation of Financial StatementsThe IAS 1 amendments were issued in January 2020, effective for annual reporting periods beginning on or after January 1, 2022. However, in response to the COVID-19 pandemic, the IASB is proposing to provide companies with more time to implement any classification changes resulting from the amendments by deferring the effective date by one year to annual reporting periods beginning on or after January 1, 2023.

The IASB is not proposing any changes to the original amendments other than the deferral of the effective date.The IASB has responded quickly to provide support to stakeholders at this difficult time. Accordingly, the comment period on the proposal is short, only 30 days. The comment deadline is June 3, 2020.

For more information, click here.

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

SEC Enforcement – SEC Co-Director Discusses SEC Enforcement During COVID-19

Summary - Steven Peikin, Co-Director of the SEC’s Division of Enforcement, recently discussed the SEC’s enforcement during COVID-19. Peikin indicates that the Division of Enforcement “have focused significant time and resources on responding to COVID-related matters. In organizing our response, we have looked to the experiences had, and the lessons learned, by our predecessors in other periods of emergency and serious market disruption, including the September 11 attacks and the 2007-08 global financial crisis.”
Topics discussed by Peikin included: (a) COVID-19 enforcement matters; and (b) ongoing non-COVID-19 work. Peikin expects there to be more trading suspensions related to COVID-19 and more fraud cases related to potential COVID-19 investment scams. 
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GASB Standards – GASB Postpones Effective Dates of Upcoming Pronouncements

  • Summary - The Governmental Accounting Standards Board (GASB) has issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance, as agreed to at the GASB’s meeting this week. The GASB intends Statement 95 to provide relief to governments and other stakeholders in light of the COVID-19 pandemic.

The effective dates of the following GASB Statements and Guidance are postponed by one year:

  • Statement No. 83, Certain Asset Retirement Obligations;
  • Statement No. 84, Fiduciary Activities;
  • Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements;
  • Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period;
  • Statement No. 90, Majority Equity Interests;
  • Statement No. 91, Conduit Debt Obligations;
  • Statement No. 92, Omnibus 2020;
  • Statement No. 93, Replacement of Interbank Offered Rates;
  • Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting);
  • Implementation Guide No. 2018-1, Implementation Guidance Update—2018;
  • Implementation Guide No. 2019-1, Implementation Guidance Update—2019; and
  • Implementation Guide No. 2019-2, Fiduciary Activities.

Further, Statement 95 postpones the effective dates of the following pronouncements by 18 months:

  • Statement No. 87, Leases; and
  • Implementation Guide No. 2019-3, Leases.

The provisions of Statement 95 are effective immediately. Statement 95 does not postpone the effective date of Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, because the pandemic was factored into Statement 94’s effective date.

For more information, click here.

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

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.