In June 2019, the SEC issued amendments to Rule 2-01 of Regulation S-X (“the Loan Rule”). The amendments now more effectively identify whether independence may be impaired with respect to an audit client when the audit firm or its covered members have a lending relationship with certain shareholders of that audit client. 

May 2020 Update: As a result of the COVID-19 pandemic, in May 2020 the Auditing Standards Board issued new guidance providing for a one-year delay to the effective date of SAS No. 134, which will now be effective for audits of financial statements ending on or after December 15, 2021 and also allows for early implementation.

Non-public entities, including private funds and investment advisors, will likely see changes to Auditor’s Reports, or the Opinion, included beginning with December 2020 audited financial statements. 

In recent years, we have seen an increase in the popularity of interval funds.  Interval funds are hybrid products that contain characteristics of both open-end and closed-end funds.  Like open and closed-end funds, they are registered under the Investment Company Act of 1940 and generally take subscriptions daily, although some interval funds may take subscriptions less frequently than daily.

Currently, there are no specific rules or requirements for investment companies relating to the financial statements of acquired funds. Instead, investment companies apply the general SEC requirements of Rule 3-05 and the pro-forma financial information requirements in Article 11 requiring disclosure and information, which are not always relevant to investment companies.

This post is the first in a three-part series that examines implications of the 2017 Tax Cuts and Jobs Act for the investment management industry.  Part Two will detail the effect of Section 199A on financial products and investors.  Lastly, Part Three will examine the deduction and C Corporation to S Corporation transitions.  Feel free to be in touch with Matt Romano, tax partner, with questions about how these complex new tax developments affect you and your business.

On August 17, 2018, the SEC adopted what effectively amounts to “housekeeping items” for a variety of public issuers. These updates are effective November 5, 2018. 

In August 2018, the Financial Accounting Standards Board (FASB) finalized changes to fair value measurement disclosure requirements that had been under debate for several years as part of the disclosure framework project.

On August 23, 2018, the PCAOB provided supplemental information to PCAOB Release No. 2017-001, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards.

Investment advisers deemed to have custody of client funds or securities:  Is your accounting firm both registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board?  In certain situations, it's an important question.  Jim Kaiser explores this and other questions about the SEC's Custody Rule in a recent issue of the Investment Adviser Association newsletter.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This standard clarifies the principles for recognizing revenue and offers a common revenue standard between U.S. GAAP and IFRS.