Essay Cove

Essay Cove

Learning Goal: I’m working on a accounting discussion question and need an explanation and answer to help me learn.The American Institute of Certified Public Accountants (AICPA) is an organization of CPAs in the United States. Prior to 1972, the AICPA had a major influence on standard setting. In 1972, the FASB began standard setting and was created independent of the AICPA. However, the AICPA remains interested in standard setting. It has a group called the Accounting Standards Executive Committee (AcSEC) that forms opinions on current topics. The AcSEC issues opinions that sometimes agree with, and other times disagree with, the FASB’s thoughts. Locate an AcSEC position (comment letters to other organizations). Select one letter to the FASB, summarize the topic covered by that letter, and indicate the position taken by the AcSEC. Do you agree with the position taken by the AcSEC? Why, or why not?
How much weight do you feel the FASB should put on these AcSEC letters in its due process procedure? Why?
Weirich, T. R., Pearson, T. C., & Churyk, N. T. (2020). Accounting and auditing research, tools, and strategies (10th ed.). Wiley. Do the discussion then response each posted down below. Posted 1 On December 23, 2021, the FinREC (formerly the AcSEC) submitted a letter to the FASB relating to ASU “Financial Instruments— Credit Losses (Topic 326) – Troubled Debt Restructurings and Vintage Disclosures.” In this letter, FinREC stated its support for the ASU. However, it also suggested clarification on the transition to the ASU and changes to the guidance on insignificant delays. The letter expresses FinREC’s interpretation of the transitions but states that other interpretations may be reasonable, suggesting that FASB clarify the guidance in the Basis for Conclusions. FinREC also suggests that a one-year threshold be included in the guidance on insignificant delays. As it is currently written, the ASU would cause any lenders who allowed payment holidays during the pandemic to have to disclose any future payment delays, even if those delays would have otherwise been insignificant. A one-year threshold help to retain the usefulness of the information without including information that is not useful to the readers of financial statements (Newell & Bergen, 2021). I do agree with the position taken by FinREC. Given the situation in the last couple of years, many loans have insignificant payment delays due to the debt holidays, and if any of there were to have future insignificant payment delays, current guidance would “preclude an entity from election to exclude a current modification with a similar insignificant payment delay from the disclosures” (Newell & Bergen, 2021, pg 3). Without the modification, entities could end up reporting information that is not useful for financial statement readers. FinREC is made up of members of the AICPA, many with more than 20 years of experience in varying fields of accounting (Facts About FinREC, 2021). As such, they are a very knowledgeable group of people who understand the technicalities and consequences of changes to accounting standards. The FASB should carefully consider all comment letters they receive, however, letters from groups with extensive knowledge and experience should be considered in greater weight. References Newell A.J. & Bergen L. (2021). FinREC Comment Letter on FASB’s Proposed ASU- Credit Losses – Troubled Debt Restructurings and Vintage Disclosures. AICPA. Retrieved from https://us.aicpa.org/content/dam/aicpa/advocacy/financialreporting/downloadabledocuments/56175896-dec-23-2021-finrecs-comment-letter-on-fasbs-proposed-asu-credit-losses-troubled-debt-restructurings-and-vintage-disclosures.pdf Facts About FinREC (2021). AICPA. Retrieved from https://us.aicpa.org/content/dam/aicpa/interestare… Posted 2 The Accounting Standards Executive Committee (AcSEC) is a title no longer officially used. In 2010 it was renamed to Financial Reporting Executive Committee (FinREC) (AICPA, 2021) Analysis of Collaborative Arrangements (Topic 808) — Targeted Improvements from the Financial Accounting Standards Board (FASB or Board). As the Comment states ASC 808 is intended to “reduce diversity” by classifying certain transactions. In other words the idea is to reduce the number of options certain transactions could have. (AICPA, 2018) This will increase consistency and make it easier to compare financial statements. You can’t disagree with the goal. What isn’t known at this point is the utility of the changes. After the new classifications are implemented, will there be much reduction of the corresponding “diversity”? Since the AICPA and FASB are essentially two arms on the same regulatory body, more weight will be given to any such guidance than I think should be warranted. Another set of eyes is always a bonus but when those eyes don’t see anything differently the usefulness is limited. A good mix of outside contributors would be far more beneficial. AICPA (June 19, 2018) Analysis of Collaborative Arrangements (Topic 808) — Targeted Improvements from the Financial Accounting Standards Board (FASB or Board). Retrieved January 8, 2022, from https://us.aicpa.org/content/dam/aicpa/advocacy/financialreporting/downloadabledocuments/finrec-comment-letters/20180619-finrec-cl-asu-collaborative-arrangements.pdf less posted 3 My opinion the letter takes the position of one size fits all balance sheet. This approach is not a very useful one as its results and information will not be beneficial for all users. Also, I can agree with re-consideration to gather all balance sheet information into one in order for the users to make better decision. I also agree with the position taken by them as for different user categories there have to be re-considerations in decision making and hence different balance sheets and if CPA has these balance sheet in one page, it will be very beneficial to them for taking necessary action. 2.How much weight do you feel the FASB should put on these AcSEC letters in its due process procedure? Why? I do feel that FASB should put weight on these letters. These letters are a clear guidance assisting FASB on research and aiding them in making final decisions. The letters are well prepared and are prepared by an experienced professional. Hanson, Jay D., (December 7, 2009) American Institute of Certified Public Accountants. Measurement of Financial Instruments. https://www.aicpa.org/advocacy/financialreporting/downloadabledocuments/fv_financial_instruments_comment_letter.pdf
Requirements: 400 words for the discussion and 100 words for response

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