Financial reporting

- A FASB initiative designed to simplify GAAP has yielded a standard that eliminates the concept of extraordinary items from GAAP.

FASB’s simplification initiative is designed to reduce cost and complexity while maintaining the usefulness of the information provided to users of financial statements.

Accounting Standards Update (ASU) No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, describes the change. It is the board’s first accounting standards update of 2015. The ASU is available at

Previous guidance required items to be classified as extraordinary when they were deemed both unusual and infrequent. Events or transactions meeting the criteria for classification as extraordinary were required to be segregated from the results of ordinary operations and shown separately in the income statement, net of tax, after income from continuing operations.

Disclosure of income taxes related to extraordinary items also was required. And entities were required to present or disclose earnings-per-share data applicable to extraordinary items.

It is extremely rare in current practice for a transaction or event to meet the requirements to be presented as an extraordinary item, but preparers nonetheless were spending time and incurring costs to assess whether events or transactions were extraordinary. The new standard eliminates the need for those assessments and eliminates the need for preparers, auditors, and regulators to evaluate whether a preparer treated an unusual and/or infrequent item appropriately.

The standard takes effect for fiscal years beginning after Dec. 15, 2015, and interim periods within those fiscal years. The amendments may be applied retrospectively to all prior periods presented in the financial statements, and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.

- The International Accounting Standards Board (IASB) issued amendments to a standard focused on improving presentation and disclosure in financial reports.

The amendments are designed to give preparers the ability to use professional judgment when preparing financial statements.

“There is a real appetite for improving disclosure in financial reporting,” IASB Chairman Hans Hoogervorst said in a news release. “While problems with disclosures cannot be solved by the IASB alone, we do have an important part to play.”

The amendments to IAS 1, Presentation of Financial Statements, are part of the IASB’s Disclosure Initiative, a broader project started to improve disclosure requirements.

The amendments, according to the news release, make clear that:

  • Materiality applies to the whole of financial statements;
  • The inclusion of immaterial information can inhibit the usefulness of financial disclosures; and
  • Companies should use professional judgment in determining where and in what order information is presented in financial disclosures.

The amendments to IAS 1 can be applied now, but they don’t become mandatory until annual periods beginning on or after Jan. 1, 2016. More information on the amendments is available at

The IASB also released an exposure draft of proposed amendments to IAS 7, Statement of Cash Flows, available at Comments can be submitted through April 17 at The proposal “responds to requests from investors for improved disclosures about an entity’s financing activities and its cash and cash equivalents balances,” the IASB news release said.


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.