Category: Accountancy

Understanding the New Lease Accounting Standards The new lease accounting standards, ASC 842 and IFRS 16, have redefined how entities report lease transactions, creating a significant impact on the balance sheets of lessees and lessors. Overview of ASC 842 and IFRS 16 ASC 842, known as the Accounting Standards Codification Topic 842, and IFRS 16…

Understanding Fair Value Measurement Fair Value Measurement, defined in Topic 820 of the U.S. Generally Accepted Accounting Principles (GAAP), establishes the framework for measuring assets and liabilities at fair value. The Financial Accounting Standards Board (FASB) outlines the principles and requirements for how entities should measure and disclose these values. Fair value under GAAP refers…

Overview of FATCA The Foreign Account Tax Compliance Act (FATCA), enacted in 2010, is critical U.S. legislation aimed at preventing tax evasion by U.S. citizens, residents, and entities through the use of offshore accounts. Under FATCA, foreign financial institutions (FFIs) are required to report information on accounts held by U.S. taxpayers to the Internal Revenue…

Overview of the Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act was established in response to the 2008 financial crisis. Designed to prevent a repeat of the crisis, this sweeping legislation introduced numerous regulatory changes aimed at increasing oversight and enhancing risk management practices within the financial industry. The Act’s creation signified…

Overview of Basel III Framework Basel III is an international regulatory framework developed by the Basel Committee on Banking Supervision in response to the shortcomings exposed by the global financial crisis of 2007-09. It seeks to fortify banks against economic stress and to prevent future crises by enhancing their regulation, supervision, and risk management. Capital…

Introduction to Sarbanes-Oxley Act In the wake of early-2000s financial scandals, Congress enacted the Sarbanes-Oxley Act (SOX) in 2002. This act targets corruption in corporations by setting new standards for all public companies and accounting firms in the United States. It was named after its sponsors, Senator Paul Sarbanes and Representative Michael Oxley, and has…

Overview of Anti-Money Laundering Regulations Anti-money laundering regulations are critical in detecting, preventing, and deterring illegally obtained funds from entering the legitimate financial system. They create an accountability framework for financial institutions to follow, ensuring the integrity of the financial markets. Historical Context Anti-money laundering (AML) initiatives evolved as responses to organized crime and financial…

Overview of ASC 606 The Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers,” is a revenue recognition standard that provides a framework for businesses to recognize revenue in a consistent and comparable manner. This standard was jointly developed by the Financial Accounting Standards Board (FASB) to replace previous industry-specific guidance. Under ASC…

Overview of Regulation S-X Regulation S-X sets forth the principles and requirements for financial statements that are submitted by public companies to the Securities and Exchange Commission (SEC). It defines the form and content of these essential disclosures. Purpose and Scope The main purpose of Regulation S-X is to prescribe the form and content of…

Overview of the Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, has been one of the most substantial reforms to the United States tax code in decades. It includes various modifications that broadly impact the economy, businesses, and the job market. One of the primary changes introduced…