News Articles

Revenue Recognition Disclosure Requirements: A Challenge That Can't Wait

Published on April 20, 2017

FASB's revenue recognition standard includes complex disclosure requirements that will take effect sooner than companies think.

As companies scramble to implement the FASB's revenue recognition standard, many are primarily focusing on the revenue and measurement requirements, which have the highest profile. Meanwhile, many companies are largely ignoring the new disclosure requirements, treating them as a minor detail that can be quickly and easily addressed once the other requirements have been satisfied. That’s a mistake.

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IRS Enforcement Activities Dropped in 2016

Published on April 20, 2017

The IRS reported several large drops in its enforcement activities in fiscal year 2016, including a 16% drop in audits, a 40% drop in levies, and a 9% drop in liens compared to the prior year. These figures were revealed in the IRS's 2016 Data Book, which reports on the agency's activities for the fiscal year beginning Oct. 1, 2015, and ending Sept. 30, 2016.

According to the Data Book, the IRS audited just over 1 million individual tax returns in FY 2016, almost 16% fewer than last year's 1.2 million. The percentage of individual taxpayers audited fell to 0.7%, which the IRS said was the lowest rate in more than a decade. The Data Book also reports that the IRS’s enforcement budget was reduced by almost $107 million in FY 2016.

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Rules Proposed for Accounting Method Changes to Reflect FASB Revenue Recognition Standards

Published on April 20, 2017

The IRS is asking for comments on proposed procedures for requesting consent to make accounting method changes to reflect FASB's new revenue recognition standards (Notice 2017-17). The proposed revenue procedure contained in the notice would govern changes in a method of accounting for recognizing income when the change is made for the same tax year for which the taxpayer adopts the new financial accounting revenue recognition standards and the change is made as a result of, or directly related to, the adoption of the new revenue recognition standards. 

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Proposal on Inventory Disclosures

Published on April 20, 2017

The FASB proposed requiring all entities to make additional disclosures regarding changes in inventory that are outside the normal purchase, manufacture or sale of inventory and the composition of inventory. All entities also would have to make certain inventory disclosures currently required by the SEC. Entities that make segment disclosures would have to make disclosures about inventory by reportable segment if they provide that information to the chief operating decision maker. Entities that apply the retail inventory method would have to make additional qualitative and quantitative disclosures about the critical assumptions they use in their inventory calculations. The proposal is part of the FASB’s disclosure framework project, under which the Board also proposed changes to the disclosure requirements for income taxes, fair value measurements and defined benefit plans. The Board also plans to review disclosure requirements for interim reporting.

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Reminder About Setting Effective Tax Rates

Published on April 20, 2017

With companies once again setting their annual effective tax rates, we'd like to remind you of some basic principles. The tax provision for the year is the same whether a company prepares only annual financial statements or interim and annual statements. The tax expense for ordinary income in an interim period is measured using an estimated annual effective tax rate. At the end of each interim period, a company must make its best estimate of the annual effective rate for the full year and apply that rate to year-to-date ordinary income. The calculation can be affected by:

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Employers' Presentation of Defined Benefit Retirement Costs Will Change

Published on April 20, 2017

The FASB issued new guidance that will require employers that sponsor defined benefit plans for pensions and/or other postretirement benefits to present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that include the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for PBEs for fiscal years beginning after December 15, 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period (i.e., only in the first interim period). The guidance provides a practical expedient for disaggregating the service cost component and other components for comparative periods.

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FASB Simplifies Accounting for Goodwill

Published on April 20, 2017

The FASB issued new guidance that simplifies the accounting for goodwill impairment for all entities by eliminating the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today's goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The new standard does not change the guidance on completing Step 1 of the goodwill impairment test. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. In addition, private companies will still have the option to elect the Private Company Council alternative on goodwill. The standard has tiered effective dates, starting in 2020 for calendar-year PBEs that meet the definition of an SEC filer. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

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FASB's New Guidance on the Definition of a Business

Published on April 20, 2017

The FASB changed its definition of a business in an effort to assist entities with evaluating whether a set of transferred assets and activities is a business. The changes will likely result in more acquisitions being accounted for as asset acquisitions rather than business combinations. The new guidance will require an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If the threshold is not met, the entity evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in the new revenue guidance. The new guidance is effective for public business entities (PBEs) for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. Clarifications to guidance on the de-recognition of nonfinancial assets

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Membership Campaign 2017

Published on April 07, 2017

The NSAC Membership Committee is once again seeking and supporting your efforts to help enroll new members to the Society. As a token of the organization's appreciation, all members will receive a portable power bank charging device in the coming weeks. We hope this device will be used and serve as a reminder of our need for members to serve as ambassadors.

The new member recruiting campaign for 2017 will award a $200 gift card to anyone who sponsors five new members. Also for anyone who sponsors a new member, your name will be added to a drawing, and at the 2017 Conference, five names will be drawn randomly for a $200 gift card.

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Kenneth Spearman's Passing

Published on April 07, 2017

It is with sad hearts that we share the news that past NSAC president Kenneth Spearman recently passed. Ken was president of NSAC in 2002-2003. During that time he worked for Citrus Central in Florida as well as Florida's Natural Growers Cooperative.

In 2009, Ken became a board member on the Farm Credit Administration, appointed by then President Obama.  In March of 2015 Ken became Chairman and CEO of the FCA and chairman of the board of the Farm Credit System Insurance Corporation. Ken stepped down from both positions in November of 2016.

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