STANDARD FOR UNCERTAIN TAX POSITIONS NEEDS TWEAKING
Norwalk, Conn. - The Financial Accounting Foundation has conducted its first post-implementation review of an accounting standard, starting with FIN 48, Accounting for Uncertainty in Income Tax Positions, and found it generally achieved its purpose, though it still needs some improvement. The report, which was compiled by an independent committee appointed by the FAF board of trustees, also found from interviews with various stakeholders that consistently applying FIN 48's guidance may not increase the comparability of information about income tax uncertainties across companies and other reporting entities.
"The principal reasons comparability may not be increased are managements' judgments and Tax Code complexity," said the report. "Management has to assess each tax position separately on its technical merits, assuming taxing authorities' full knowledge of the positions. Different judgments may result in different reported outcomes, even for similar uncertain income tax positions."
Overall, the report found that the benefits of FIN 48's improved consistency and reporting of income tax uncertainty information outweigh its costs.
PROFESSIONAL ORGS OBJECT TO MANDATORY AUDIT ROTATION
Altamonte Springs, Fla. - The Institute of Internal Auditors sent a comment letter to the Public Company Accounting Oversight Board taking issue with the PCAOB's proposal to require mandatory rotation of audit firms for listed companies, echoing concerns raised by the American Institute of CPAs and the New York State Society of CPAs.
The IIA pointed to its own research indicating that a majority of members disagree with the concept, citing the disadvantages of mandatory rotation, including increased costs to the company and the audit firm, a steep learning curve and loss of knowledge, potential erosion in audit quality, potential opportunities for opinion shopping, and the potential that rotation would diminish the role and influence of the audit committee.
