With the potential for a significant change in the corporate tax rate (35% to 20%) this month as a result of the tax bill in Congress, we are re-posting a potential sleeper issue that could arise for some companies in their Q4 and FYE results. If a tax bill is enacted with a lower corporate tax rate (e.g., new 20% rate), companies will need to recalculate their deferred tax assets and deferred tax liabilities on their balance sheets based on the new rate as the assets and liabilities need to be adjusted in the period of enactment. Any charges would flow through to the companies’ income statements.
Read more about the potential sleeper issue and how it will likely affect your company here.
I provided insight in a recent Law360 article on the CEO pay ratio disclosure requirements mandated by the Dodd-Frank Act. The disclosure requires that public companies disclose the compensation of its chief executive and its median average employee, as well as the ratio between the two. Companies will soon have to comply by disclosing the pay gap for fiscal 2017 in their annual 10-K reports and in their 2018 proxy statements.
In a recently published Accounting Today article, I provided insight on the impact of the new audit report standard from the Public Company Accounting Oversight Board (PCAOB), which was approved by the Securities and Exchange Commission (SEC) on October 23. The new standard — which is the first significant change to the audit report in over 70 years – expands the scope of the audit report by requiring a discussion of “critical audit matters” and a disclosure of auditor tenure.
In a Bloomberg BNA article, I provided insight on what future additional updates the SEC Staff could be focusing on following the Commission’s announcement of proposed amendments to Regulation S-K last week. The article quotes Elizabeth Murphy, an associate director in the SEC Division of Corporation Finance, from an October 18 Association of Corporate Counsel conference discussion saying the SEC has “more to come from our Reg S-K disclosure initiative,” but did not specify any particular recommendations to Regulation S-K the Commission plans to focus on. I noted that the Staff might continue to focus on MD&A disclosures and Regulation S-K’s Item 101, the narrative description of the business. In those areas, many comments on the concept release urged the SEC to “move from prescriptive rules to a more principles-based approach,” I explained in the article. “Given how fundamental these S-K sections are to SEC filings generally, it seems reasonable to believe the SEC Staff would develop recommendations to these rules for Commission consideration.”