A month after the SEC announced that companies could delay earnings filings by 45 days, its chief accountant, Sagar Teotia, said the agency would allow companies to “make significant judgments and estimates” about many accounting issues so long as they disclose those decisions.
Those issues include but are not limited to fair value and impairment considerations, leases, debt modification, hedge, revenue recognition, income taxes, going concern, subsequent events and the adoption of new industry standings.
The Office of the Chief Accountant also said two sections of the recent Coronavirus Aid, Relief and Economic Security (CARES) Act would not violate generally accepted accounting principles.
Section 4013 allows financial institutions to suspend GAAP standards for loan modifications related to the pandemic for debt that would otherwise be categorized as troubled debt restructurings. Institutions do not have to categorize such a loan as a troubled debt restructuring.
The suspension applies to the period from March 1 through Dec. 31 or until 60 days after national emergency declared by President Donald Trump is lifted, whichever is sooner.