Blog: What issues should be on the 2021 audit committee agen

Blog: What issues should be on the 2021 audit committee agenda? | Cooley LLP


e.g., the new credit losses standard).
A key aspect of CECL, according to 
Bloomberg, is the requirement that businesses “make a ‘reasonable and supportable’ assessment about the future when they tally expected losses. The uncertainty about the coronavirus could throw what they previously thought of as reasonable out of whack.” As noted in this PubCo post, at a meeting of the SEC’s Investor Advisory Committee, a Committee member commented that, in light of the economic conditions resulting from COVID-19, determining impairment of accounts receivable under these conditions could be a “total guess.” (See this PubCo post.)
In June, Teotia issued another a Statement on the Continued Importance of High-Quality Financial Reporting for Investors in Light of COVID-19, in which he reiterated that, with respect to estimates and judgments, OCA has “consistently not objected to well-reasoned judgments that entities have made,” and emphasized that OCA “will continue to apply this perspective.” In that regard, companies must provide disclosure about significant judgments and estimates that is “understandable and useful to investors.” In addition, the resulting financial reporting must reflect and be “consistent with the company’s specific facts and circumstances.” 

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