Every day, accounting professionals are faced with a growing burden of regulatory and compliance requirements, with more looming ahead in 2022 and beyond. While IRS guidance and regulatory changes stemming from tax laws and other governmental bodies continue to present compliance challenges, there are three additional trends which could have a far-reaching impact on accounting professionals and their clients in the future. These include:
- Managing financial disclosures and tax policy, for both public and large private companies affected by SEC requirements.
- Coming changes to disclosure requirements for Environmental, Social, and Corporate Governance (ESG).
- Reporting requirements from pandemic-related government stimulus programs which require proper documentation, recording, and reporting for audits.
All three of these trends will demand attention going forward, adding another aspect of the continually shifting regulatory landscape which must be effectively managed. To help your firm keep up to date, here is an overview of each one and their predicted impact:
Tax and Financial Regulation Reporting
The Consolidated Appropriations Act was introduced to provide relief with the COVID stimulus payments. In the process, it has created new complexity for accountants. The Act’s tax extenders, Paycheck Protection Program (PPP) expense deductions, second-draw PPP loans and a simplified process for PPP loans under $150,000, provide plenty of components that may affect your clients.
As if Covid-related changes weren’t enough, there are changes in leadership at the SEC which are likely to further impact financial reporting requirements. With so many changes afoot, it is key to have tax records that are accurate and easy to access. This is where the right accounting software plays an integral role in your firm’s ability to stay on top of these changes. Doing so will make another complex tax year much easier.
Environmental, Social and Corporate Governance (ESG)
Environmental, social, and corporate governance (ESG) is a growing area of focus for many organizations, and it’s widely expected there will be new federal regulations pertaining to ESG, especially related to financial disclosures for public companies in the near-term. For example, The Sustainable Finance Disclosure Regulation (SFDR) includes mandated disclosure of climate-related financial risks and greenhouse-gas emissions in any entity’s operations, as well as in their supply chain.
All accountants should be on alert for other ESG financial disclosure compliance updates. An excellent source for additional information is the AICPA and other trade associations. The AICPA recently provided resources related to the documentation of environmental-focused policies and increased diversity as well as other key compliance trends in this area.
New Accounting Standards from FASB
The Financial Accounting Standards Board (FASB) updates accounting standards with changes that can affect financial statements and how to keep them GAAP (Generally Accepted Accounting Principle) compliant. It is key for accountants to keep any changes from FASB front and center in their practices, failure to do so could have negative consequences for professionals and their clients. Although the phased implementations of standards have been delayed because of Covid-19, these changes will be implemented more rapidly in the future, especially once the worst of the pandemic is behind us.
In a nod to the impact of the dynamic regulatory requirements on the accounting profession, The Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB), and The Accounting Review (TAR) will be hosting a joint conference titled “Accounting for an Ever-Changing World,” in 2022. It is certainly worthwhile keeping continuing education opportunities such as these on your radar.
Any one of the trends mentioned above would have significant impact on the accounting profession. Combined, they are instrumental in reshaping the environment in which firms must operate and effectively manage impacts on their clients and themselves. To ensure your firm has a current view on these and other trends reshaping the profession, register for the 9 Developments Shaping Accounting’s Future webinar on November 18, 2021, at 2 p.m. here!