Bramwell’s Lunch Beat: Are CAE and Audit Committee Top Priorities in Sync?by
IASB downplays lease accounting rules impact on debt covenants
New lease accounting rules set to be finalized this year won’t have a dramatic effect on existing debt covenants, according to the International Accounting Standards Board (IASB), wrote Vipal Monga of the Wall Street Journal’s CFO Journal. Companies that bring off-balance-sheet leases onto corporate books will likely be able to use old definitions of “debt” or “earnings before interest, taxes, depreciation, and amortization,” thereby staying in compliance with their covenants, the IASB said on Monday. The IASB issued a document outlining changes that will result when a decades-long effort by US and international accounting standard-setters to overhaul lease accounting culminates later this year with final rules.
Survey: Chief audit executives and audit committee members out of sync
Chief audit executives (CAEs) and audit committee members are facing a disconnect, according to Grant Thornton LLP’s fifth annual Governance, Risk, and Compliance Survey. CAEs and audit committee members are seeing internal audit priorities differently, especially when prioritizing risks. Audit committee members rank financial risks as the most important priority, followed by compliance, operational, and strategic risks. CAEs rank compliance risks as the most important, followed by operational, financial, and strategic risks. When asked about the top three areas for internal audit to deliver value, audit committee members rank “mitigating risk” first, followed by “stronger financial controls compliance” and “identifying improvement opportunities.” CAEs rank “identifying improvement opportunities” first, followed by “mitigating risk” and “increased efficiency.”
Most tech CFOs in the dark about revenue rule
With the Financial Accounting Standards Board (FAS B) considering a delay in implementation of the new standard on recognizing revenue from contracts with customers, a new survey from BDO USA LLP has found that more than half of technology company CFOs have not yet even familiarized themselves with the changes, wrote Matthew Heller of CFO. In addition to finding that 57 percent of the tech company CFOs are still unfamiliar with the new standard, BDO USA’s annual survey of 100 US technology CFOs reported that 52 percent are still analyzing the impact. Only 20 percent are ready to implement the new revenue recognition standard, and 18 percent say they are looking for guidance on various implementation issues. FASB staff members have been preparing a report on a possible deferral amid complaints from some companies that they need more time to revamp their practices and systems to put the new standard into effect. The report is expected to be presented to the board early in the second quarter.
Digging into the TurboTax ID thefts
In testimony before the Senate Finance Committee on March 12, Chairman John Valentine of the Utah State Tax Commission provided details on a surge of fraudulent state tax refund claims that caused Intuit, maker of TurboTax, to suspend e-filing for 24 hours in early February, wrote Laura Saunders of the Wall Street Journal. Utah was among the first states that called attention to the spate of fraudulent filings, though more than two dozen states experienced issues. According to Valentine, most of the fraudulent refund claims had several things in common. One was direct-deposit information on the fraudulent returns was often different from the previous year, with refunds requested to be issued on prepaid debit cards, which “cannot easily be traced or recovered,” he said. Information on most fraudulent 2014 returns was also copied directly from the 2013 return, often including the same address.
How people plan to spend their income tax refunds
Most people who are expecting tax refunds this year, or who already got one, plan to use the money to improve their personal finances, a new survey reveals, wrote Nanci Hellmich of the USA Today. About a third (34 percent) say they’ll use it to pay down debt, and another third (33 percent) say they’ll save or invest the money, according to the survey of 1,003 adults, conducted for Bankrate.com. About a quarter (26 percent) say they’ll spend the extra cash on necessities, such as food and utility bills, and 3 percent want to use it to live it up and go on vacation or a shopping spree. The rest plan to do something else with it or don’t know what they’ll do. Also, two-thirds (67 percent) of adults who are 18 to 29 years old expect to receive a tax refund this year or have already gotten one versus 40 percent of folks 50 to 64.
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