July 23, 2018
Tax Reform: Sooner or Later, SAB 118’s “Holiday Gift” Will Stop Giving
In a recent speech, the SEC’s Deputy Chief Accountant – Sagar Teotia – reminded companies that the clock is ticking on finalizing disclosures relating to the impact of tax reform. As you’ll recall, the OCA gave everyone a holiday gift last December by issuing Staff Accounting Bulletin No. 118.
At the risk of oversimplifying, SAB 118 permits companies to assess, record provisional amounts & ultimately finalize disclosure of the financial impact of tax reform over a “measurement period” of up to one year from the date of the legislation’s enactment. However, this excerpt from the Deputy Chief Accountant’s speech clarifies that SAB 118 does not allow companies to defer reporting of tax reform’s impact:
Let me clarify a point about the measurement period and the expectation to be acting in good faith. SAB 118 states that the measurement period ends when an entity has obtained, prepared, and analyzed the information that was needed in order to complete the accounting required under ASC 740 and in no cases should the measurement period extend beyond one year from the enactment date. This should not be interpreted as a window to put pencils down until we are close to one year from the enactment date to get started on the accounting. Instead, entities should continue to keep moving in good faith to complete the accounting.
The measurement period ends when an entity has completed the process necessary to finalize its assessment of tax reform’s impact – and for certain income tax effects, that could be well before the one year mark.
Diversity: CalPERS Board Diversity Update
CalPERS recently provided this update on its efforts to improve board diversity among its portfolio companies. Among its other actions, CalPERS:
– Engaged more than 500 U.S. companies in the Russell 3000 Index regarding the lack of diversity on their boards;
– Adopted a “Board Diversity & Inclusion” voting enhancement to hold directors accountable at engaged companies that fail to improve diversity on their boards or diversity & inclusion disclosures;
– Withheld votes against 271 directors at 85 companies & ran proxy solicitations at two targeted companies where diversity proposals were filed by other investors.
Future actions under consideration include development of enhanced key performance indicators (KPIs) for diversity & inclusion. The KPIs will enable CalPERS to move beyond assessing whether a company has a dimension of board diversity to a more granular assessment of whether it has a level of board diversity that reflects each company’s business, workforce, customer base, and society in general.
CalPERS also intends to use the data provided by these enhanced key performance indicators to identify US companies lacking in diversity and file majority vote proposals & vote against board chairs, Nominating & Governance Committee members, and long-tenured directors at those companies.
Our “Q&A Forum”: The Big 9500!
In our “Q&A Forum,” we have blown by query #9500 (although the “real” number is much higher since many of the queries have others piggy-backed on them). I know this is patting ourselves on the back – but it’s over 15 years of sharing expert knowledge and is quite a resource. Combined with the Q&A Forums on our other sites, there have been well over 30,000 questions answered.
You are reminded that we welcome your own input into any query you see. And remember there is no need to identify yourself if you are inclined to remain anonymous when you post a reply (or a question). And of course, remember the disclaimer that you need to conduct your own analysis & that any answers don’t contain legal advice.
– John Jenkins