Fortner Bayens, P.C. Banking Letter - April 2019 Edition

CECL is WARMing Up!

Alexander L. Muñoz, CPA

The FASB staff recently discussed the Weighted Average Remaining Maturity (WARM) methodology for reserving for credit losses as an acceptable approach to adopting CECL.

As the Current Expected Credit Loss (CECL) standard moves toward implementation (currently slated for fiscal years beginning after December 15, 2021 for non-public business entities), the answer to the question of “what will it look like?” is becoming clearer.  In this case, the Financial Accounting Standards Board (FASB) staff, in their recent Q&A session on Credit Losses, discussed the Weighted Average Remaining Maturity (WARM) methodology as acceptable for CECL. 

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Phishing: Past - Present - Future 

Alyssa L. Reeves, MIS, CISSP, CISA, CEH

As you all know by now, when I talk about phishing, I’m not referring to sitting by the lakeside, enjoying the sun with your favorite pole in hand.  However, your attackers could be fishing, while they’re phishing you, laughing at the irony of it.  The truth is phishing is not difficult and yet still extremely effective. The financial industry still bears the majority of phishing attacks in the United States, making up 59% of phishing attempts according to the 2018 NTT Security Global Threat Intelligence Report.  That number remains so high because phishing is just as effective today as it was in its inception in the early 1990s.  The type of phishing, how bad actors target their victims, and who is targeted has changed over the years, but the basic concepts and methods are still used.  Today, I want to walk through the evolution of phishing and where I think it’s heading in the future.

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New S Corporation Basis Reporting Rules

Mark J. Corey, CPA, JD

A recently published “clarification” by the Internal Revenue Service (IRS) related to reporting S Corporation activity on Schedule E of the Form 1040 has caused some confusion and concern among taxpayers and tax return preparers (

The Internal Revenue Code section 1366(d)(1) provides that S Corporation shareholder’s losses and deductions cannot exceed their basis in stock and debt.  And Treasury Regulation section 1.6001-1(a) requires shareholders to maintain permanent books and records to establish losses and deductions reported on their return (basis computation).  This has been the law for a long time- shareholders (not the corporation) are required to track the basis in their S Corporation stock and make sure they have sufficient basis to takes losses or distributions tax-free when they report these items on their personal return on Schedule E.

 So what is “new” in the IRS clarification?  

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Changes to the Disclosure Requirements for Defined Benefit Plans

Michelle L. Steinbronn, CPA

In August of 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2018-14, Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans, as part of their disclosure framework project. The objective of the project is to improve the effectiveness of disclosures in the notes to the financial statements for employers that sponsor defined benefit pension or other postretirement plans. Several removals, modifications, and additions have been made to the defined benefit plans standard (Subtopic 715-20) under this ASU. 

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FASB Proposes Changes to Income Tax Disclosure 

Michael P. Kurtz, CPA

In March, the Financial Accounting Standards Board (FASB) issued a revised proposed Accounting Standards Update (ASU), Income Taxes (Topic 740) – Disclosure Framework—Changes to the Disclosure Requirements for Income Taxes.  The proposed ASU is a revision of an exposure draft issued by the FASB in July 2016, which was FASB’s broader disclosure framework project to improve the effectiveness of disclosures in notes to financial statements.  FASB delayed finalizing the proposal, because of the federal government passing the Tax Cuts and Jobs Act in December 2017.

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