SEC Chief Accountant Sagar Teotia Highlights COVID-19 Accounting Issues
SEC Chief Accountant Sagar Teotia highlighted efforts made by the SEC Office of the Chief Accountant ("OCA") to monitor and address issues raised in response to COVID-19.
Financial Accounting Standards Board ("FASB")
In a statement, Mr. Teotia identified several areas of accounting and financial reporting that the OCA and FASB predict will require "significant judgments and estimates" due to the evolving status of the pandemic, including:
- fair value and impairment factors;
- leases;
- modifications or restructurings of loan payments;
- hedging;
- revenue recognition;
- income taxes;
- "going concern";
- past events; and
- implementation of new accounting standards.
Mr. Teotia said that OCA staff "would not object" to eligible firms temporarily deferring certain U.S. Generally Accepted Accounting Principles ("GAAP") provisions, as provided under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").
Public Company Accounting Oversight Board ("PCAOB")
Mr. Teotia noted the OCA's recent work with the PCAOB to provide PCAOB-registered audit firms a 45-day period of relief from inspections (see previous coverage). He reaffirmed the OCA's commitment to focusing on auditor independence matters, and reiterated that maintaining auditor independence is the mutual responsibility of audit committees, management and management auditors.
International Accounting and Audit-Related Standards
Further, Mr. Teotia cited the OCA's coordination with the International Accounting Standards Board ("IASB") to monitor the impact of COVID-19 on accounting practices, both domestically and abroad.