Financial Reporting and Regulatory Update

Second Quarter 2021

From the AICPA

New working drafts

Construction contractor illustrative financial statements

The AICPA’s Financial Reporting Executive Committee (FinREC) published, on May 10, 2021, a working draft of an exposure draft of new illustrative financial statements for a nonpublic company construction contractor. The draft, “Construction Contractors Revised Sample Financial Statements,” includes proposed guidance for implementing Accounting Standard Codification (ASC) Topic 606, “Revenue From Contracts With Customers,” and Topic 842, “Leases.”

The draft presents revenue recognition guidance that will be included in the AICPA Audit and Accounting Guide (AAG) “Construction Contractors” as Appendix H. The draft notes that the proposed sample financials statements provide nonauthoritative guidance, will be included for illustrative and informational purposes only, and are not intended to establish reporting requirements.

Comments were due July 12, 2021.

Insurance entities

On May 26, 2021, FinREC issued four working drafts addressing accounting issues for insurance entities. These drafts provide guidance on implementation of ASU 2018-12, “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.” When finalized, the text will be included in the AAG “Life and Health Insurance Entities.”

The newly released working drafts are: 

Comments are due July 29, 2021.

Revised TQAs

In April 2021, the AICPA revised Section 6400, “Health Care Entities” of its Technical Questions and Answers (TQAs) relating to provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) specific to healthcare entities. The TQAs, originally issued in 2020, help nongovernmental healthcare entities account for payments received from the CARES Act, the Provider Relief Fund, and boosted Medicare and Medicaid payments.

The revised TQAs include:

  • TQA Section 6400.63 – Background to Sections 6400.64-.70 – CARES Act Provisions Specific to Health Care Entities
  • TQA Section 6400.64 – Accounting for Provider Relief Fund General and Targeted Distribution Payments
  • TQA Section 6400.66 – Period of Accounting for Provider Relief Fund Phase 1 General Distribution Payments
  • TQA Section 6400.68 – Accounting for Payments Received Under the Medicare Accelerated and Advance Payment Program