Financial Reporting

The SEC issued Staff Accounting Bulletin (SAB) no. 108, which provides guidance on quantifying financial statement misstatements, including the consideration of the effects of the carryover and reversal of prior-year misstatements ( ). Typically, entities have quantified such errors in one of two ways—as the amount by which the current-year income statement is misstated or the amount that the current-year balance sheet is misstated. The commission staff believes companies should evaluate misstatements under both approaches and adjust their financial statements whenever either approach results in a misstatement that is material when all relevant quantitative and qualitative factors are considered.

The staff said it will not object if a registrant records a one-time cumulative-effect adjustment to correct errors, from prior years, that had been considered to be qualitatively and quantitatively immaterial, based on appropriate use of the registrant’s previously employed approach. The SAB adds section N to Topic 1, “Financial Statements,” of the Staff Accounting Bulletin series.

The Government Accountability Office issued a report, “Financial Statement Restatements: Trends, Market Impacts, Regulatory Responses and Remaining Challenges,” in response to a request from Senator Paul S. Sarbanes (D-Md.), chairman of the Senate Committee on Banking, Housing and Urban Affairs ( ). The objective of the report was to provide information on the number of, reasons for and trends in restatements, their impact on the restating companies’ stock market capitalization and on investor confidence in financial reporting and the capital markets, and the resulting SEC enforcement actions. A summary is available on the Web site of the AICPA Center for Public Company Audit Firms ( ).


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.