In a quest for simplification, accounting rulemakers have identified what many consider to be an easy fix for measuring the current value of inventory when there’s suspicion it may be diminishing as products sit in a warehouse or gather dust on a store shelf.
The Financial Accounting Standards Board has proposed a plan to reduce the number of data points companies will have to produce to determine the value that should be reflected on the balance sheet for inventory. That means fewer steps, simpler controls, and fewer opportunities for error. According to a recent analysis by Audit Analytics, in 2012 inventory ranked third on the list of reasons why companies disclosed deficiencies in their accounting procedures.
