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Private Company Accounting Changes Spark Debate Over Simplification

December 03, 2013

The move to create exceptions to accounting rules for private companies is sparking a larger debate over simplification, with some pushing for more simplification for public companies too and purists on the other side fretting over a dual set of rules. "One of the dangers is comparability. There's a reason for the way things have been for so many years," says Denise Moritz, senior manager at accounting firm WeiserMazars.

The Age of the Bilingual Accountant

November 19, 2013

The accounting convergence movement may be waning, but that doesn't mean international accounting rules are any less relevant in the United States. With differences likely to remain between U.S. and international accounting rules indefinitely, some are stressing the importance of gaining fluency in both. "If you want to be a relevant participant in U.S. capital markets, you need to have this bilingual skill," says David Schmid, a partner at PwC.

Insurance Accounting Proposal Pulls Many Non-Insurers in Too

July 16, 2013

A substantial change in insurance accounting recently proposed by the Financial Accounting Standards Board could resonate well beyond insurance company circles, affecting companies that issue product warranties, financial guarantees, and similar contracts. "You'd think it's about the insurance industry, but it's much broader than that," says Robert Rostan, principal and CFO at corporate training firm Training the Street. More inside.

FASB to Require Troubled Companies to Fly a Red Flag

July 09, 2013

FASB proposed a new accounting standard last week that will require companies to disclose if they think they will have trouble meeting financial obligations in the next 24 months; some fear the going-concern warning could create a death spiral effect. "This is a particularly sensitive disclosure because of the concern that the disclosure itself ends up becoming a self-fulfilling prophecy," says Stanley Keller, a partner with law firm Edwards Wildman Palmer.

This Year's Stealth Headache: New Rules for Offsetting Disclosures

July 02, 2013

Halfway through the 2013 reporting year, the surprise headache for financial reporting executives seems to be new disclosure requirements about how assets and liabilities on the corporate balance sheet are offset and reported as net positions. "This was a sleeper for some," says Sherif Sakr, a partner at Deloitte & Touche. "Some companies perhaps underestimated the effort that would go into the process." More inside.

SEC Officials Detail Reporting Red Flags, Status of IFRS

May 29, 2013

Representatives from the SEC headed a panel at last week's Compliance Week 2013 conference where they detailed the topics that most commonly appear in staff comment letters and offered suggestions for dealing with scrutiny. Hot spots include segment reporting, deferred tax, and pension accounting. They also provided an update on the pending decision to adopt international accounting rules: no decision coming anytime soon. More inside.

The End of U.K. GAAP

April 16, 2013

U.S. companies will have to start producing financials for all their British subsidiaries under a new financial reporting rulebook next year, as the United Kingdom phases out its version of Generally Accepted Accounting Principles. While most public U.K. companies moved to International Financial Accounting Standards by 2005, private companies and subsidiaries have had the option to remain on U.K. GAAP. In 2015, that will no longer be an option. More details inside.

FASB Wants Companies to Predict and Book Future Credit Losses

January 15, 2013

The Financial Accounting Standards Board has issued a proposed accounting standards update that will require companies to predict credit losses and likely book higher reserves, even before cash flow begins to suffer. While the standard will apply to all companies, the change is intended to give investors an earlier warning that a financial firm may be headed for trouble based on its debt securities and loan portfolio. More details inside.

Lawsuit Exposes Gaps in Loss Contingency Disclosures

December 18, 2012

Yahoo announced in late November that it was facing a $2.7 billion penalty as a result of a lawsuit in Mexico it lost against a phone directory company. The verdict surprised investors, since Yahoo hadn't reported the potential outcome as part of its loss contingency disclosure. The Financial Accounting Standards Board and the SEC have made such disclosures a top priority in recent years, after complaints about too many litigation surprises. Details inside.

New FASB Standard on Offsets Could Have Unintended Consequences

October 23, 2012

The Financial Accounting Standards Board adopted new disclosure requirements on balance sheet offsets in 2011 to take effect in 2013 for calendar-year companies. Some companies, however, are finding the language of the standard overly broad. "Any entity with financial instruments subject to master netting arrangements would need to review this," says Mike Loritz, a shareholder at law firm Mayer Hoffman McCann.

Ten Years On, Convergence Movement Starting to Wane

October 02, 2012

A decade has passed since the Norwalk Agreement officially set in motion the massive effort to converge U.S. and international accounting rules—and yet, the movement may be waning as the two boards wind down several major projects and prepare to focus on other agendas. What happened? "Frankly, I think many people are starting to get tired of convergence," says David Schmid, PwC's international accounting leader in the United States.

Samsung's Failure to Warn of Legal Loss Raises Accounting Questions

September 11, 2012

Samsung was hit with a $1 billion jury verdict in its patent lawsuit with Apple last month, but it had made no warning to investors in financial statements leading up to the verdict, despite accounting rules to disclose potential losses. The omission highlights the difficulties of putting loss contingency rules into practice. A full look at what Samsung and Apple did and didn't report before the verdict is inside.

IFRS: The Waiting Is the Hardest Part

July 24, 2012

Accounting executives gained little solace from the SEC's final report on adopting IFRS accounting in the United States, with no clear sense of when that might happen. What's next? More exasperation from IFRS standard setters for one, and don't forget that U.S. GAAP is converging with IFRS anyway. "Those changes ... are more likely to have a substantial impact sooner than any action the SEC might take," says Chris Wright of Protiviti. More inside.

SEC Taking a Closer Look at Use of Non-GAAP Measures

July 03, 2012

The Securities and Exchange Commission is taking a hard look at voluntary disclosures that don't adhere to Generally Accepted Accounting Principles, and while not prohibiting non-GAAP measures, it has an unkind view of those that seem to obscure the truth. "Earnings before bad stuff is where you get into trouble," says Peter Bible, a partner with audit firm Eisner Amper.

Financial Reporting Update

June 19, 2012

As potentially game-changing new rules on financial reporting emerge from the Financial Accounting Standards Board and the Securities and Exchange Commission, companies are struggling to stay ahead of the curve and craft plans to implement the new rules and financial reporting changes. A recent discussion at Compliance Week 2012 offered some advice to issuers to keep up. Details inside.

Boards Struggle on Single Method to Account for All Leases

June 05, 2012

Try as they might, accounting standard setters haven't yet figured out a single method to account for all leases, so they're rethinking whether they should create different approaches for different kinds of leases. "Even board members have said it's going to be a challenge to come up with one model that makes everyone happy," says Sydney Garmong, a partner with Crowe Horwath.

Restatements: Let Me Count the Ways

May 30, 2012

When a financial reporting error is identified, companies generally need to decide if a restatement of prior periods is in order, or if correcting it in the current period will suffice. Yet there are multiple ways to correct an error through a restatement. Inside, Columnist Scott Taub looks at the many different types of restatements and offers his views on when each is appropriate.

Back to the Drawing Board for FASB on Going-Concern Warning

May 30, 2012

The Financial Accounting Standards Board will try again to come up with requirements for management to issue a warning if a collapse could be imminent. The idea worries some executives. "It is very concerning to corporations to be stigmatized with a going-concern qualification if they don't feel it's deserved," says Dennis Beresford, audit committee chairman at Legg Mason.

How Not to Go Public

May 01, 2012

Online coupon purveyor Groupon got a rude awakening early in its public-company life: The Internet darling was forced to drastically revise down earnings and to admit to several internal control weaknesses. Shareholders quickly filed lawsuits. Such suits are likely to become more common now that the JOBS Act makes it easier for companies to go public without proper control systems. More inside.

A Review of the Post-Implementation Review Process

April 24, 2012

A recent development in financial reporting that may have gone overlooked by some amid the flurry of activity is the Financial Accounting Foundation's new post-implementation review process for accounting standards. Inside, Columnist Robert Herz takes a close look at the new review process, including a pilot review of the accounting standard for uncertainty in income taxes.

Companies Laboring to Make Sense of New Fair-Value Rules

March 20, 2012

With the first-quarter close approaching, companies and their auditors are still trying to determine how they will comply with a new rule that adjusts the method for measuring fair value and requires new disclosures. "Companies are still ... trying to figure out what this really means and what it is going to look like," says Manish Choudhary, a principal at Deloitte. Details inside.

FASB, IFRS Foundation Unveil Latest Taxonomies

January 19, 2012

It's not official yet, but the 2012 U.S. GAAP taxonomy is available for public consumption, reflecting changes that occurred as a result of the draft and comment process. The SEC still needs to give its final blessing to the new taxonomy; no date has been set for that. A draft of the XBRL taxonomy for IFRS standards is also available.

Accounting: 2012 Could Bring More Questions Than Answers

January 03, 2012

With many of the projects to converge U.S. Generally Accepted Accounting Principles and International Financial Accounting Standards nearing completion, several big questions remain, including what path the SEC will take on whether and how to adopt IFRS. "It doesn't appear those will be resolved or any changes will be effective in 2012," says Bob Dohrer, national director of assurance services for McGladrey & Pullen.

SEC Delays IFRS Plans, While Companies Grow Impatient

December 20, 2011

The SEC will miss its long-promised deadline of deciding sometime this year whether to adopt international accounting standards here in the United States—and financial reporting executives at U.S. corporations are starting to show their exasperation. "The lack of certainty is very costly," said Susan Callahan, manager of accounting policy and special studies at Ford Motor Co. All the details are inside.

Bracing for XBRL Liability

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.

Economic Uncertainty Forces a Review of Accounting Assumptions

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.

Slow Going on the Road to Convergence

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.

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

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.

U.S. Companies Prepare for IFRS Even as They Oppose It

June 01, 2011

Are U.S. executives beginning to sour on the idea of adopting international accounting standards in the United States? At the Compliance Week 2011 conference in Washington last week, top accountants at Microsoft and Xerox said the costs might outweigh the benefits. Regardless, they say companies must prepare for the possibility of adopting international standards. More details inside.

Delays and Difficulties Mar the Path to IFRS Adoption

May 03, 2011

A series of delays on accounting convergence projects will complicate the SEC's vow to decide this year whether to adopt International Financial Reporting Standards for U.S. companies. Indications of the SEC's thinking are hard to come by, but prognosticators say adoption won't happen anytime soon—if at all. More details inside.

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