Restating Financial Results

In the first half of 2021, there was a surge in financial restatements. The reason relates to guidance issued by the Securities and Exchange Commission, requiring special purpose acquisition companies (SPACs) to report warrants as liabilities. SPACs are shell corporations that are listed on a stock exchange with the purpose of acquiring a private company, thereby making it public without going through the traditional IPO process. Historically, SPACs that offer warrants (which allow investors buy shares at a set price in the future) have reported those instruments as equity.

Post-Mortem of Revenue Recognition Rules

The Financial Accounting Standards Board (FASB) recently conducted a post-implementation review of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The rules were issued in 2014 but took effect in 2018 for public companies and in 2019 for private companies.

FASB Proposes Last-Minute Change to Lease Accounting Rules

On June 16, the Financial Accounting Standards Board (FASB) issued a proposal that would enable private companies to have a more flexible approach when using a discount rate to measure lease liabilities. The discount rate directly impacts the lease liability that companies record on their balance sheets, and the proposed tweak would be a helpful simplification.

DLA, LLC Announces 2021 Mid-Year Promotions

DLA, LLC (“DLA”), an Internal Audit, Accounting & Corporate Finance Advisory Firm headquartered in the New York Metro area, is excited to announce the promotion of several employees. “Our culture is to promote from within,” stated Founder & CEO David Landau. “Each of these employees have shown hard work, dedication, and commitment to our clients, and we are proud to have them on our team. I have no doubt that they will continue to excel and exceed our expectations in their new roles.”

How to Strengthen Your Internal Controls

Internal controls are a system of policies and procedures organizations put in place to protect assets and improve operating efficiency. Effective internal controls are critical to accurate financial reporting. A solid system of controls can help prevent, detect and correct financial misstatements due to errors and fraud.

Accounting for Business Combinations

If your company is planning to merge with or buy another business, your attention is probably on conducting due diligence and negotiating deal terms. But you also should address the post-closing financial reporting requirements for the transaction. If not, it may lead to disappointing financial results, restatements and potential lawsuits after the dust settles.

Concerns About the Going Concern Assumption During an Audit

After peaking in fiscal year 2008, the estimated total of going concerns for fiscal year 2019 fell to the lowest amount in 20 years, according to a recent study by Audit Analytics. Unfortunately, the COVID-19 pandemic caused financial distress that could bring an end to this downward trend for fiscal year 2020.