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Impairment

A Push for Audit Quality Could Send Costs Higher

Tammy Whitehouse May 15, 2012

After several large audit firms scored poor marks on their most recent round of audit inspections, many are responding by stepping up their game. They are investing more in training and staff, and planning on giving problem areas more scrutiny—all of which could drive costs higher. "We are doing a number of things differently," says Robert Moritz, chairman of PwC's U.S. operations. More inside.

FASB, IASB Find Common Ground on Impairments

Tammy Whitehouse December 16, 2011

The Financial Accounting Standards Board and the International Accounting Standards Board appear to be mending some differences over how to account for financial instruments, reaching agreement on the controversial question of how to recognize impairments, or deterioration in value. More details inside.

Opinion Upheld in Claim on Goodwill, Loan Losses

Tammy Whitehouse September 27, 2011

Companies might be able to rest a little easier about subjective assertions made in financial statements, following a recent decision in the U.S. Court of Appeals for the Second Circuit. The Court ruled that statements concerning goodwill and loan loss reserves represent opinions, not facts, and can't be considered false or misleading unless a plaintiff can prove preparers didn't really believe what they wrote when they wrote it.

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.

FASB to Unveil Simpler Rule Testing Goodwill Impairment

Tammy Whitehouse August 13, 2011

FASB is going to publish a new, simpler way to test goodwill for impairment, after the recession forced companies to flush billions of dollars in goodwill off the balance sheet in recent years. The amendment to existing rules will say a company can make a qualitative assessment about the need for a write-down before proceeding to the existing quantitative, two-step test.

FASB Retreats on Fair Value for Financial Instruments

Tammy Whitehouse February 15, 2011

The Financial Accounting Standards Board backed away from plans to require financial companies to use fair value accounting for all financial instruments. Instead, it has proposed the creation of three categories of financial assets and liabilities, each with different valuation criteria and treatment in financial statements. Details inside.

FASB, IASB Ink Impairment Compromise

Tammy Whitehouse February 01, 2011

The U.S. and international accounting boards have agreed on a single approach for how to account for underwater loans or other non-performing financial assets. The model would require an entity to consider historical data, current economic conditions, and supportable future forecasts to estimate losses.

FASB Revises Views on Expected Credit Losses

Tammy Whitehouse November 17, 2010

The Financial Accounting Standards Board is starting to soften its stand on how companies should account for expected credit losses as it pick through a long list of objections to its proposed accounting standards update for financial instruments.FASB met with the International Accounting Standards Board to work through various questions...

FASB Advances EITF Proposals on Goodwill, M&A

Tammy Whitehouse October 08, 2010

The Financial Accounting Standards Board is proposing new updates to the Accounting Standards Codification around goodwill write-downs, business combinations, and revenue recognition for healthcare entities based on recommendations from its Emerging Issues Task Force.In the proposal titled Intangibles – Goodwill and Other (Topic 350): How the Carrying Amount of a Reporting Unit...

KPMG Study Shows Tapering Off in Goodwill Impairment

Tammy Whitehouse June 04, 2010

It appears the mass scale writedown in goodwill is finished, at least for now, according to a recent KPMG study of more than 1,700 U.S.-based public companies.The Big 4 firm studied goodwill impairments from 2005 through 2009 and discovered impairments declined significantly in 2009 from 2008, with 20 percent fewer...

SEC: Negative Equity Doesn't Mean No Impairment

Tammy Whitehouse December 17, 2009

When companies are testing for possible impairment of goodwill in a seemingly troubled reporting entity, the staff of the Securities and Exchange Commission has signaled it won’t be fooled by attempts to spin negative equity into a rationalization that an impairment doesn’t exist.Evan Sussholz, professional accounting fellow for the SEC, said...

Experts Sought on Cash Flow Approach to Credit Losses

Tammy Whitehouse October 28, 2009

If you’re full of ideas about how credit impairments should be determined based on expected cash flows, here’s your chance to pipe up and help shape future accounting rules.The International Accounting Standards Board and the Financial Accounting Standards Board are looking for candidates to serve on an expert advisory panel...

KPMG Suggests Goodwill Writedowns Doubled in 2008

Tammy Whitehouse July 17, 2009

The 2008 wave of goodwill impairments provides yet another disturbing piece evidence of the value that’s being wrung out of companies as a result of the recession.Goodwill is an intangible asset that often results from an acquisition; it’s the amount a company pays to acquire another company over and above...

SEC Staff Accounting Bulletin Syncs Up Impairment Rules

Tammy Whitehouse April 21, 2009

The staff of the Securities and Exchange Commission has published a new staff accounting bulletin regarding impairment to make its accounting literature consistent with recent pronouncements on impairment from the Financial Accounting Standards Board.Staff Accounting Bulletin No. 111 amends an earlier staff accounting bulletin titled “Other Than Temporary Impairment of...

FASB Rushes Guidance on Inactive Market, Impairment

Tammy Whitehouse March 17, 2009

Frustrated by a seizure in judgment and duress from Congress, the Financial Accounting Standards Board is rushing through two new pieces of guidance intended to help grease the wheels of a stalled economy.The board met in an unusual Monday morning meeting to hash out guidance that will define when markets...

Watch Accounting Like a Hawk, Investor Advocates Advise

Tammy Whitehouse February 12, 2009

As turmoil persists in financial markets and shakes confidence in the economy, investor advocates are cautioning analysts to be vigilant for signs of aggressive accounting tactics and fraud.RiskMetrics Group is telling analysts to be especially skeptical about information companies present or dress up as measures of their financial health—“particularly non-GAAP...

Going Concern Is Issue to Watch in 2009, Fitch Says

Tammy Whitehouse January 15, 2009

Management assertions about whether a company can continue as a going concern in the current economic environment should be “required reading” for investors, according to a Fitch outlook for 2009.Companies and their auditors are facing off over whether toxic assets without ready buyers should be written down. Exacerbated by a...

SEC Defends Fair Value, Calls for Guidance

Tammy Whitehouse December 31, 2008

An intensive study by the Securities and Exchange Commission has concluded that classic fears of credit quality and banks’ viability caused banks to fail and the financial markets to grind to a halt last year, rather than mark-to-market accounting rules.The SEC study, mandated by Congress last fall when it passed...

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