The Top Stories in Accounting in 2013
Our editors’ picks for the biggest stories in accounting in 2013
It was a busy year for standard-setters and regulators this year, with many new faces and many new trends. What follows, in more or less chronological order, are our editors’ top picks for the biggest stories in accounting of the past year.
While it officially held its first meeting in December of 2012, the Private Company Council really hit the ground running in 2013 under Chairman Billy Atkinson (pictured), with a full slate of meetings and proposals, many of which were subsequently endorsed by FASB, and gave a strong impression that the new council would go a long way toward helping ease the financial reporting burden on small businesses.
In April, the partner-in-charge of KPMG’s Pacific Southwest practice, Scott London (pictured) was charged with insider trading after years of providing information about audit clients to a friend in return for cash and gifts, often delivered, crime-movie-style, in shady parking lots. KPMG promptly resigned from the affected audits, and firms everywhere began double-checking policies and staff, but London proved to a lone rotten apple, soon forgotten despite a flood of headlines.
Photo © Reuters
After a January nomination, former federal prosecutor Mary Jo White was formally sworn in as the new chair of the Securities and Exchange Commission in April. There has been exactly zero talk from her commission about IFRS – but plenty about cracking down on accounting and financial fraud.
In May, FASB and the IASB released a proposed standard for lease accounting that would radically change the way these transactions are reported – but the response was less than enthusiastic, and many of the comments that came in by the September due date were less than flattering.
Also in May, the Committee of Sponsoring Organizations of the Treadway Commission released a long-awaited (since 1992!) update to its internal controls framework, which it recommends that users adopt by Dec. 15, 2014.
In June, the American Institute of CPAs released a new “Other Comprehensive Basis of Accounting” that it called the Financial Reporting Framework for Small and Midsized Entities. It was briefly controversial – including a high-profile rejection by the National Association of State Boards of Accountancy – but the institute’s continued insistence that FRF for SMEs was not meant in any way to replace GAAP brought many (including NASBA) around, and small businesses began to look at it as another way to simplify their reporting.
The start of July saw new faces at both major American standard-setters: Russell Golden (pictured, at right) took the chair at FASB after the departure of Leslie Seidman, and David Vaudt (at left) succeeded Robert Attmore at GASB – even as FASB and the Financial Accounting Foundation celebrated their 40th anniversary.
The argument over auditor rotation that the Public Company Accounting Oversight Board started in 2012 continued in 2013 with new developments: In July, the House of Representatives voted 321-62 to order the PCAOB not to even think about auditor rotation. The bill went nowhere in the Senate, however, and in December, the European Union moved even closer to adopting mandatory rotation with a tentative deal to require public companies to engage new auditors every 10 years.
Besides continuing to aggressively inspect and grade auditors throughout the year, in August, the PCAOB proposed a number of changes to make the auditor’s report more robust, including new information on the auditor’s tenure and independence. It was not overly popular, particularly with board directors, but that didn’t stop the board from asking for even more: In December, it reproposed that audit firms should release the name of the engagement partner on any particular audit.