Updates and insights from 2023 AICPA conference has been saved
By PJ Theisen, Audit & Assurance Partner, Deloitte & Touche LLP
For those of us in accounting and finance, it is important to remember that financial reporting is not merely an exercise in compliance with SEC and GAAP requirements. It’s also a communication vehicle designed to convey critical information to investors.
Presenters and panelists reiterated this message in multiple sessions at last month’s AICPA & CIMA Conference on Current SEC and PCAOB Developments, held December 4–6 in Washington, DC. In addition to this emphasis on communication to investors through financial reporting, I came away with several other important updates timed to prepare accounting and finance professionals for the upcoming reporting cycle.
Let’s break down a few of the topics that generated considerable attention at the conference.
In a Q&A session, SEC Chief Accountant Paul Munter shed additional light on his recent statement underscoring the need for preparers and auditors to apply the same level of scrutiny to the statement of cash flows (SoCF) as they do to other primary financial statements. He emphasized the importance of the SoCF to investors seeking to understand an entity’s sources and uses of operating, financing, and investing cash flows and encouraged preparers to consider using the direct method to report operating cash flows.
SEC Associate Chief Accountant Carlton Tartar discussed the new SEC guidance on segment reporting. He noted that under newly issued ASU 2023-07 an entity is permitted to disclose multiple measures of segment profit or loss but is still required to report the one measure that is most consistent with GAAP.
In a subsequent panel discussion, members of the SEC’s Division of Corporation Finance (the “Division”) noted that if an additional measure of segment profit or loss is disclosed that is not a GAAP measure, it is still considered a non-GAAP measure. The panel also underscored the Division’s request for anyone planning to early-adopt the ASU and show additional measures of profit or loss that are not determined in accordance with GAAP to discuss their proposed disclosures with the Division.
Members of Division staff discussed recent rulemaking initiatives, including clawback provisions. SEC Division Chief Accountant Lindsay McCord explained that entities are now required to “check the box” on the cover page of an annual report when voluntary or mandatory corrections are made to prior-period financial statements. Ms. McCord also noted that a second box would need to be checked if a recovery analysis was required for a correction of incentive-based compensation received by any executive officer.
For those of us in accounting and finance, it is important to remember that financial reporting is not merely an exercise in compliance with SEC and GAAP requirements. It’s also a communication vehicle designed to convey critical information to investors.
Audit quality is an important topic at any AICPA conference. In this year’s PCAOB keynote session, Chair Erica Williams addressed the increase in inspection comments and deficiency rates for the 2022 inspection cycle. She noted that the PCAOB recorded the most enforcement-related penalties in its history and reiterated the importance of firm culture to high-quality audit engagements and upholding trust in the auditing profession.
These are just a handful of highlights culled from dozens of updates discussed at the conference. Deloitte’s DART site includes our recent Heads Up chronicling the full spectrum of SEC, PCAOB, and FASB accounting and reporting developments covered at the event. The comprehensive publication is designed to serve as a resource to highlight the 2023 updates.
Deloitte can provide insights and advice as you navigate these changes and address your year-end accounting and reporting challenges. Feel free to contact me, PJ Theisen, with any questions.
PJ Theisen is an Audit & Assurance Partner in Deloitte’s National Office Accounting and Reporting Services Group specializing in technical accounting matters in the areas of financial instruments, revenue recognition, and accounting for digital asset transactions under US GAAP and IFRS. Also, he serves companies in both an advisory and audit capacity that operate in the blockchain, technology, and life science industries, with a focus on accounting and financial reporting. He is also involved in monitoring standard setting by the FASB and other regulators and developing related thoughtware. He previously served as a Professional Accounting Fellow in the SEC’s Office of the Chief Accountant, consulting with SEC registrants and other offices and divisions within the SEC and liaising with standard setting bodies and other regulators both in the US and abroad. PJ received a BA in accounting and finance from the University of St. Thomas, Opus College of Business. He is a Certified Public Accountant in Washington, D.C. and Minnesota.