RubinBrown’s Construction Services Group recently attended the National Associated General Contractors’ (AGC) Financial Issues Forum in Washington, D.C.
It was an active week to be in the United States Capitol. One meeting with the House Ways and Means Committee had to be cut short due to hearings on lost emails and computer hard drives. We were also fresh off the heels of a new House Majority Leader being appointed, which was the constant ‘buzz’ around town.
The economic update provided by Bernard Markstein, Economist - Reed Construction Data is forecasting 3 - 6% growth in nonresidential construction for the remainder of the year. In addition, the residential construction forecast looks promising across much of the nation with growth projections slightly above 10% for 2015.
The year started slower than expected due to the weather, as an increase in wintery mixes slowed construction across much of the nation in the first quarter. On the residential side, single-family homes are expected to drive most of the growth, while office, commercial and manufacturing sectors are expected to drive nonresidential growth for the remainder of the year.
Forecasts for 2015 spending look very promising in both residential and nonresidential which includes a great outlook for Heavy Construction.
In addition to the economic forecast, various accounting and tax issues were also discussed:
- A member of the Financial Accounting Standards Board (FASB) joined us to discuss the newly issued standard on revenue recognition and explained more details regarding the Transition Resources Group for Revenue Recognition (TRG), as well as a new financial statement disclosure framework project. Future considerations for Lease Accounting and agenda items of the Private Company Council (PCC) were also discussed.
- The TRG will not issue formal guidance, but will solicit, analyze, and discuss issues arising from implementation of the new revenue recognition standard. This committee should be a great resource for companies and practitioners.
- The PCC’s agenda includes potential accounting changes to intangible assets recognized in a business combination and stock compensation.
- The final Lease Accounting Standard is expected in 2015. Several simplifications have been made to the proposal since the last exposure draft.
- FASB’s disclosure framework project is ongoing and it is currently reviewing and considering changes to the disclosure requirements over pensions, income taxes, and fair value disclosures.
- FASB’s new Revenue Recognition Standard was discussed in great detail by our committee. Some specific areas discussed included the impact of revenue recognition on claims, change orders, and uninstalled materials. New financial statement disclosure requirements were also discussed at length.
- A congressman from the House Ways and Means Committee joined us to discuss tax reform. While reform is not likely during 2014, the Congressman did feel that certain tax extenders would be passed after the November elections and near the end of the year. Accelerated depreciations methods, including section 179 expensing, are expected to be included in the tax extenders bill.
Finally, the committee also addressed the expected short comings of the Highway Transportation Fund and how the AGC should address this issue with Congress. The AGC staff monitor congressional activities regularly and feel action will be taken this year to increase highway funding.
RubinBrown will keep up to date on activities from Washington and other accounting and tax items and will inform you about issues that will impact you and your business.
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