SASB AIMS TO SET SUSTAINABLE ACCOUNTING STANDARDS

San Francisco -- A new nonprofit organization, the Sustainability Accounting Standards Board, said in early October that it intends to develop and publicly distribute industry-specific sustainability accounting standards for the benefit of companies, investors and the public.

The San Francisco-based board is positioning itself as a complement to the standards-setting work done by the Financial Accounting Standards Board. "SASB will be the U.S. voice for material non-financial issues and how to recognize and account for them as part of corporate reporting," said SASB executive director Dr. Jean Rogers in a statement. "The standards we develop will promote sustainable value creation and ultimately enhance the competitiveness of all U.S. industries on the most pressing challenges facing industry and society today."

As its first initiative, SASB is producing a "Materiality Map" that weights the priority of sustainability issues by industry across 10 sectors. Harvard Business School Professor Robert Eccles will serve as founding chairman.

 

CHANGES COMING TO INTERNAL AUDIT STANDARDS

Altamonte Springs, Fla. -- The Institute of Internal Auditors has announced that a set of 18 revisions to International Standards for the Professional Practice of Internal Auditing -- which are mandatory under the IIA's Professional Practices Framework -- will go into effect on Jan. 1, 2013. Key changes include:

  • Clarifying the responsibilities of internal auditors and the chief audit executive;
  • Increasing focus on the quality assurance and improvement program requirements, and clarifying ways in which conformance can be achieved;
  • Clarifying the CAE's role in communicating unacceptable risk;
  • Explicitly requiring timely adjustments to the internal audit plan;
  • Ensuring the audit plan covers risks to achieving strategic objectives; and,
  • Adding more examples of what constitutes "functional reporting to the board."

 
FINREC RECOMMENDS SHELVING ASU

Norwalk, Conn. -- The American Institute of CPAs' Financial Reporting Executive Committee sent a letter to the Financial Accounting Standards Board raising issues with a proposed Accounting Standards Update, Financial Instruments (Topic 825), Disclosures about Liquidity Risk and Interest Rate Risk.

FinREC suggested that the disclosures proposed in the ASU "are static ... they provide a point-in-time picture of a company's financial assets and liabilities and how they would run off in future periods using unrealistic assumptions."

The committee recommended that FASB not issue the ASU, but rather address the issues in its overarching "going concern" framework project, and engage the Securities and Exchange Commission in making any needed enhancements regarding liquidity and interest rate risk disclosure in Management's Discussion & Analysis.

Recognizing that FASB might not take its advice to abandon the proposed ASU, FinREC also included some suggested improvements to it.

 

GAAP SHAPES INT'L M&A

A recent study by researchers from the University of Missouri at Columbia and the University of Arkansas found that accounting standards may play a significant role in shaping cross-border mergers and acquisitions.

The study, which was presented during the American Accounting Association's annual meeting, examined cross-border M&A deals stemming from 32 countries that took place from 1998 to 2004. The report showed that the volume of M&A was higher for countries that had comparable accounting principles, and that the premium takeover price is typically greater if the target countries' GAAP is identical to that of the country where the acquirer is based.

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