Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

News For CPAs During The Pandemic: FASB guidance on leases – 4/14.

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More info for CPAs. FASB releases a Q&Q for lease issues.  Another round of layoffs seems to be appearing.

4/10/20 – FASB published the following Staff Q&A – Topic 842 and topic 840: Accounting for lease concessions related to the effects of the COVID-19 pandemic – If this issue affects your clients, you need to read the guidance.

An extremely simplified (and probably incorrect) way to summarize this is a contract modified in accordance with the our existing terms of a lease agreement would not be handled as a lease modification. If concessions are outside the enforceable rights and obligations in a lease than the concessions would be accounted for as a lease modification. There is a potential for massive amount of analysis and calculations needed for the bottom of modifications that are not in accordance with the existing terms.

FASB staff expect there will be a very large volume of lease concessions as a result of the pandemic.

Over summarizing three long paragraphs, the advice in question one is the staff “believes that it would be acceptable” for organizations to make an election that all modifications arising from the pandemic pianos as if they were in accordance with the existing terms and conditions of release. In other words an election can be made not to treat every concession as a modification, i.e. as if it was a new contract.

Again, if this applies your clients you really need to grab a copy of this document. Hint: put it in your workpapers.

Expanding circle of unemployment

4/14/20 – Wall Street Journal – Second Round of Coronavirus Layoffs Has Begun. Few Are Safe. – The first round of layoffs was service industries, such as restaurants, hotels, sports/entertainment venues, or retail.

Article says another round of layoffs is starting. This will affect professionals, such as accountants, attorneys, or architects. Other types of service industries are getting hit as well, such as IT service organizations and into the financial service sector.

Survey conducted by WSJ of five dozen economists shows a consensus of another 14.4 million jobs over the next several months. Consensus of those surveyed is a 13% unemployment reate in June.

4/9/20 – Going Concern – Tracker: These Accounting Firms Have Either Cut Jobs or Pay (or Both) During the COVID-19 Crisis – Article has a list of 16 US firms and six firms outside the US pay or had layoffs or both. Looks like accounting firms are getting hit very hard.

4/10/20 – Going Concern – Pay Cut Watch ‘20: It’s Not Good Friday at Moss Adams – This is merely the most recent description of what one firm is doing. The steps to reduce costs:

  • Partners get a 20% pay cut through the end of the year
  • All other staff get cuts in the range of 5% up to 20% for a four month period
  • 90 day furlough for 370 staff
  • 90 day reduced work schedule for 240 staff now you

Written by Jim Ulvog

April 14, 2020, 13:41 pm at 1:41 pm

Posted in Accounting, Other stuff

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