There is a scam being perpetrated that tricks personnel in companies to wire large sums of money to the scammers. This was noted in a July 29, 2015 Wall Street Journal article and by an FBI agent in a recent financial institution conference I attended. The scammers exploit weakness in e-mail systems and human error. They apparently send e-mails to personnel in a company that originate wires that appear to be from a superior or other person that authorizes wires. The wires are sent to the scammers account and the money is gone. These are typically relatively large amounts too. Companies that originate wires should review and adapt their controls, inform relevant personnel about the scam, and ensure rigor in processes and controls. Financial institutions should do the same, remain vigilant in their processes and controls, and make sure customers are aware of the risk from the scam.
It’s amazing what one can do when one does what it takes.
In the 12/11/15 meeting deliberations on PROPOSED changes to not-for-profit GAAP (there continues to be discussions about the proposal to change, not actual changes), the FASB board decided not to require the direct method of cash flow statement presentation, but rather to allow either the direct or indirect (and to also allow the direct method without also requiring the reconciliation central to the indirect method to be presented also). Additionally, the Board agreed on reducing net asset classes from three to two, which would be net assets with donor restrictions (including the aggregate amount endowment funds are underwater) and net assets without donor restrictions. Board-designations and their purposes would continue to be presented either on the face of the statements or in the notes.
The FASB recently issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This is a simplification of the classification of deferred taxes on balance sheets. Currently, deferred tax assets (“DTA”) and deferred tax liabilities (“DTL”) have to be separately classified as current or noncurrent based on the classification of the related asset or liability. Then, current DTA’s and DTL’s are netted and presented as current, and noncurrent DTA’s and DTL’s are netted and presented as noncurrent. With this simplification, all DTA’s and DTL’s will be noncurrent. DTA’s (and any related valuation allowance) and DTL’s for each tax-paying component of an entity and within a particular tax jurisdiction will be netted and presented as noncurrent. If an entity has multiple tax-paying components and or tax jurisdictions, then the net DTA/DTL’s for each cannot be offset.
For all entities other than public business entities, the change is effective for annual periods beginning after December 15, 2017, but earlier application is permitted, and may be applied to the current period only or to all periods presented.
See the attached excerpt from the November 9, 2015, Supervision News Flash, from the Federal Reserve Bank of Richmond. It provides some good advice about what you should be doing now to prepare for the new accounting standard (code name CECL) and approach to estimating loan losses. CECL is currently expected to be issued in Q1’16. Although the implementation date is still uncertain, speculation is that implementation would be required in 2019/2020 timeframe. Although that sounds like a long time away, as you begin to understand the requirements and formulate a methodology, you will realize that you will likely need several years of data you may not collect and retain currently.