What a year. In 2019, we cheered as the U.S. captured another title in the women’s World Cup, watched in horror as Notre Dame burned, and, at long last, learned who ended up winning television’s Game of Thrones. The world of securities filings was only slightly less eventful than HBO’s fantasy-land (thankfully, it’s also coming to a much more satisfying ending). So much happened, in fact, that we are splitting our year-end blog recap in two.
Let’s begin in alphabetical order, covering two particularly active topics from the last twelve months: accounting and auditing.
Accounting
We began the year talking about the biggest accounting topic of 2019, or maybe the entire decade. We’re speaking, of course, about the new revenue recognition standards that began taking effect this year. Those standards were the subject of not one but two Intelligize reports: the first of which detailed the changes and examined the experience of early adopters; the second looked at the SEC’s investigative priorities with respect to the new standards. You can download both reports here.
Much of our blog discussion in 2019 dealt in some way with revenue recognition, including our posts about:
- Companies using the media to do an end run around the ban on reporting non-GAAP revenue numbers.
- The overreaction to Starbucks getting inquiries about its implementation of the new rev rec standard.
- Reports of the SEC’s inconsistent approach to “ghost revenue.”
Though it seemed so at times, revenue recognition wasn’t the only accounting topic that issuers and regulators wrestled with in 2019. Other stories that caught our eye included:
- The use of non-GAAP earnings figures to calculate executive compensation.
- FASB delaying the implementation date for new accounting standards for current expected credit losses and lease accounting.
- The dramatic decrease in public companies filing restated financials.
- The possibility that public companies are using disclosures in public filings to manage their earnings figures.
Auditing
Auditing was another critical topic in 2019. Or, at least “critical audit matters” were. The Public Company Accounting Oversight Board’s revised audit report rules went into effect for large accelerated filers in 2019, and we responded with a survey on how issuers are faring. Our report on the topic investigated, among other critical preparation steps, how compliance officials are adapting their corporate disclosures and processes to comply with the new rule on CAMs. You can download it here.
Other auditing stories from the last year included:
- KPMG getting dinged with a $50 million penalty for a scheme to clean up past audit work slated for inspection by the PCAOB, and
- A number of topics relating to auditor independence, including the loosening of the so-called “loan restriction” in the SEC’s auditor-independence rules.
On Thursday, we’ll turn our attention to the corporate governance questions that dominated 2019.