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accounting

Preparing for W-2 Healthcare Cost Reporting

Tammy Whitehouse February 14, 2012

Come next tax season, companies that issue more than 250 W-2 forms will be required to report on that form how much they spent on each employee's health coverage. Despite the looming deadline, companies are still somewhat baffled by the exercise. "We hear from our clients: 'I don't really understand what the point of this is,'" says Ben Lupin, director of compliance at Corporate Synergies Group.

Foreign Banks, Others Struggle to Prepare FATCA Compliance

Reese Darragh January 17, 2012

As the 2013 deadline nears for foreign banks and others to strike a deal with the Internal Revenue Service to monitor accounts held by U.S. citizens, confusion remains about exactly which companies must comply with the law. "Until companies really pull up their sleeves and take a hard look at all the necessary changes, they won't realize the impact," says Laurie Hatten-Boyd, a principal at KPMG.

Regulators Debate Solutions to Poor Audit Quality

Tammy Whitehouse January 10, 2012

An alarming increase in the rate of audit failures at Big 4 firms has caused the Public Company Accounting Oversight Board to consider controversial ideas, such as mandatory rotation of audit firms. But others, including the SEC, are urging the PCAOB to slow down. They want a better understanding of why audits fail before taking any extreme measures to improve them. More details inside.

Disclosures Would Help Tax Accounting, Study Says

Tammy Whitehouse January 03, 2012

Companies carrying big deferred tax assets on their books typically rely on their tax planning strategies to determine whether those assets need a write-down - yet they disclose little about what those strategies entail. That's the conclusion of the Georgia Tech Financial Analysis Lab after its recent study of deferred tax assets and corporate disclosures about the tax planning strategies that drive the accounting.

SEC Calls for Companies to Disclose Europe Debt Exposure

Tammy Whitehouse December 13, 2011

Staff members of the Securities and Exchange Commission revealed the top items they are paying close attention to during filing reviews, including exposure to the European debt crisis, pension accounting, and goodwill impairment. The SEC is looking carefully at how troubles abroad might affect companies and how they are explaining it to investors, said staff members at a recent conference. Details inside.

Buttoning Up the Year-End Close

Tammy Whitehouse December 06, 2011

It's that time again. Companies should be combing through financials to assure their estimates are sound and that they are paying close attention to the issues that regulators are focused on as they prepare to close the books on 2011. And a cloudy economy could mean rethinking some assumptions. "There's more uncertainty in the markets, so more could go wrong," says Kevin Pianko, a partner with accounting firm WeiserMazars.

Parsing New Revenue Recognition Proposal

Tammy Whitehouse November 29, 2011

The latest proposal from the Financial Accounting Standards Board for how companies should recognize revenue falls somewhere between an earlier proposal and current practice—but far enough away from current practice still to give financial reporting departments lots to consider. "I've seen very few companies that won't see some level of change," says Dusty Stallings, a partner with PwC. A close look at the standard is inside.

SEC Challenging Multinationals on Plans for Foreign Earnings

Tammy Whitehouse November 15, 2011

The SEC warned that if companies claim they are reinvesting foreign earnings outside the United States and avoiding the taxes to repatriate them, then they must provide more information to prove it and tell a consistent story to investors. "You have to be able to support that assertion," says Bob Norton, chief income tax officer at consulting firm Vertex. Details inside.

Regulators Consider New Warning Measures for Troubled Companies

Tammy Whitehouse November 08, 2011

Investors are clamoring for new mechanisms to warn that a company may be on the verge of collapsing, but the Financial Accounting Standards Board is still wondering whether the answer is new rules, or better enforcement of current rules. "I'm very concerned we are talking about adding things through [new rules] that are already required," FASB Chairman Leslie Seidman says.

Bracing for XBRL Liability

Tammy Whitehouse November 01, 2011

Companies with market caps of more than $5 billion began submitting their financial statements in the interactive data format known as XBRL two years ago. Now the transitional period is ending, opening these companies up to litigation and additional regulatory scrutiny. Worse, there is no audit standard for XBRL to assure the accuracy of their filings. More details inside.

New Rules on Comprehensive Income Lead to Head-Scratching

Tammy Whitehouse October 25, 2011

Companies are finding it tougher than expected to comply with a new rule on reporting other comprehensive income, raising questions about what exactly belongs in OCI in the first place. "It's a garbage dump. When FASB doesn't know what to do with something, they throw it into adjusted OCI," says Mike Loritz of audit firm Mayer Hoffman McCann. Full coverage inside.

Economic Uncertainty Forces a Review of Accounting Assumptions

Tammy Whitehouse October 11, 2011

Uncertainty—in the form of downgrades to government debt, market volatility, and more—is forcing companies to rethink numerous accounting estimates and forecasts that affect impairments, valuation, receivables, and hedges, to name only a few. "It could have accounting implications for an ineffective hedge, or there could have been transaction costs for a hedge you didn't need," says Chris Wright of consulting firm Protiviti. More inside.

Q&A: A Conversation With America's Top Accountant

Tammy Whitehouse October 04, 2011

In the latest of our Q&A interviews, we sat down with Leslie Seidman, chairman of the Financial Accounting Standards Board. Inside, Seidman discusses the status of FASB's efforts to converge U.S. accounting rules with International Financial Reporting Standards, FASB's work on loss contingencies, and what's next for the accounting standard setter, including a project that could lighten the disclosure burden.

New Step Could Make Testing for Goodwill Impairment Easier

Tammy Whitehouse September 27, 2011

Corporate accounting departments now have an (allegedly) easier method to test for goodwill impairment. FASB's newly revised standard, which auditors are calling "step zero," could prevent more complicated calculations; some say it could also create problems for auditors, since it involves qualitative analysis. "Judgments are often pretty hard to audit, and they're subject to second-guessing," says Chuck Evans of audit firm Grant Thornton.

New Risk-Assessment Audit Standards Seek to Spotlight Fraud

Tammy Whitehouse September 20, 2011

Companies can expect more scrutiny from their audit firms this coming annual report season, thanks to new standards the audit firms themselves must meet to assess risk, including the risk of fraud. "We have to quit treating fraud risk as a bolt-on, as if it's an exercise separate from the others," says James Comito of audit firm Mayer Hoffman McCann. A look at the new standards is inside.

Slow Going on the Road to Convergence

Tammy Whitehouse September 13, 2011

A compromise appears to be emerging on whether U.S. companies should adopt international accounting standards sometime in the future. The basic concept: a long, gradual transition period (which the SEC has been promising anyway), with a fast-track option for companies that want to make the switch sooner. One problem—investors generally hate the idea. All the latest developments in accounting convergence are inside.

Regulators Eye Chinese Wall for Reverse Mergers

Reese Darragh September 13, 2011

Fed up with sketchy Chinese corporations sneaking onto U.S. stock exchanges through reverse mergers, Nasdaq and the New York Stock Exchange are proposing tough new rules to crack down on the process. The proposals would require reverse-merger companies to file an annual report with the SEC, go through a waiting period, maintain a minimum share price, and trade for one year on another regulated foreign exchange. More details inside.

FASB Project May Reduce Financial Disclosure Burden

Tammy Whitehouse September 07, 2011

Public companies could see a reduction in the total amount of financial disclosure they make if the Financial Accounting Standards Board proceeds as planned with a project, still in the early stages, to develop a better, simpler framework for how decisions about financial disclosures are made. That said, deciding what to leave out won't be easy. "The demand for information is virtually unlimited," says John Hepp, a partner at Grant Thornton.

New Disclosures Required for Multi-Employer Pension Plans

Tammy Whitehouse August 09, 2011

The Financial Accounting Standards Board detailed its plan to revise an accounting standard on multi-employer pension plans, such as union plans that require corporate funding as part of collective bargaining agreements. Companies will be required to disclose the amount they are contributing to each significant multi-employer plan that they support and its funded status. More details inside.

XBRL Enters the Final Phase

Tammy Whitehouse August 02, 2011

When public companies file their latest financial statements in coming weeks, almost all of them will be required to use the XBRL tagging system for interactive data. The smallest companies have had three years to prepare, but many still struggle with the technology. "I'd say a lot of the smaller, 'Wave 3' companies are still pushing this off," says Raul Varela, vice president at Rivet Software.

Don't Create 'Little GAAP' for the Wrong Reasons

Scott Taub July 26, 2011

Accounting rulemakers are considering the creation of a new board to weigh separate accounting standards for private companies and create them as necessary. Inside, Columnist Scott Taub argues that end users, not costs, should be the focus of the effort, and that the Financial Accounting Foundation is not the right group to lead it.

Leveraged Leases Going Out of Style

Tammy Whitehouse July 26, 2011

The Financial Accounting Standards Board is putting the finishing touches on a new standard for leases that will include no special treatment for leveraged lease arrangements, and already companies are abandoning the financing technique. "Prices for all of those products will be higher because FASB is killing the product," says Bill Bosco, a public policy consultant with the Equipment Leasing and Finance Association.

Accounting Rules for Foreign Currency Raise Questions

Tammy Whitehouse July 19, 2011

As cross-border merger activity picks up and currency exchange rates fluctuate, many companies find that they need to brush up on accounting rules for foreign currency. "You wouldn't think it would cause headaches year after year, but we do see companies that have challenges," says Brian Jobe, a partner with Deloitte & Touche. More inside.

IRS Limits Scope of Sec. 162(m) Deductions

Jaclyn Jaeger July 12, 2011

The IRS has proposed changes to the rules on what deductions companies can take for spending on executive compensation, which clarify the requirements for deducting performance-based pay and what types of plans qualify. "It's a potential trap for the unwary if you continue to move along and don't at least check to make sure you're in compliance," says Ben Wells, a partner with law firm Dinsmore & Shohl.

Investors, Issuers, and Regulators Discuss IFRS

Karen Kroll July 12, 2011

The SEC took another step forward last week in its ponderous debate about adopting international accounting standards in the United States, with a roundtable that generally supported the idea. Still, the list of concerns is long—foremost the cost of any transition, especially for small companies. Full coverage is inside.

States Ratchet Up Enforcement of Unclaimed Property Rules

Tammy Whitehouse July 06, 2011

Deficit-challenged states are looking at unclaimed property to help fill gaps in their budgets. They are increasingly leaning on companies to turn over abandoned assets, and some are even trying to broaden the definition of what can be considered unclaimed. "These audits are unlike anything I've seen in 30 years of doing this," says Noel Hall, a principal at tax firm Ryan.

FASB Finalizes New OCI Presentation Rule

Tammy Whitehouse June 17, 2011

The Financial Accounting Standards Board has published a final rule on how companies must display other comprehensive income in their financial statements to make it more visible to investors. The new standard narrows the choices companies will have about how to display OCI in their financial statements from three to two.

Shortcut May Work on Some Late Hedges, PwC Says

Tammy Whitehouse June 14, 2011

PwC is getting lots of questions from clients on whether it is OK to use a shortcut method of accounting for certain late hedges that occurred due to changes in interest rates after the instrument had been issued. While the shortcut method is appealing, PwC advised companies to be careful, since it only applies in a small number of instances.

SEC Squinting at Overseas Earnings

Tammy Whitehouse June 14, 2011

Companies that keep offshore earnings abroad to avoid U.S. taxes have some explaining to do to satisfy not just tax authorities, but the Securities and Exchange Commission. The agency is scrutinizing such disclosures carefully these days, SEC staffer Mark Shannon said at the recent Compliance Week 2011 conference, to make sure companies are explaining offshore earnings to investors properly. Details inside.

FASB Pulls Up on Multi-employer Pension Plans

Tammy Whitehouse June 03, 2011

The Financial Accounting Standards Board has decided to back off from a proposal to require extensive new disclosures for companies that fund multi-employer pension plans. Under the latest proposal, companies would not have to disclose their "withdrawal liability," the amount they would owe if they suddenly left the plan.

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