If I received a quarter for each time I've heard the words "liabilities," "transparency" and "balance sheet" in the same sentence since I've been at the helm of Accounting Today, well, I wouldn't need to be at Accounting Today - or any job, for that matter.That profession-centric troika of terms has again come across my desk in the form of FIN 48, the interpretation by the Financial Accounting Standards Board that would usher in more tax-related, um, liabilities being properly included on, yep, the balance sheet providing, yes, greater transparency.
Now I don't pretend to be an expert on explaining the rule, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109, but after 20-plus years in journalism, I do know something about human nature.
As with Sarbanes-Oxley, in particular Section 404 - which was passed into law for what seemed like five minutes before the complaints on time and costs of implementation began rolling in - it was inevitable that before long, a cadre of trade and lobbying groups, as well as software associations, would seek a rollback or a least a postponement of these uncertain tax positions.
For the record, FIN 48 became effective for fiscal years beginning after Dec. 15, 2006.
In December, one group, the Tax Executives Institute, urged its member companies to send FASB letters petitioning the effective date of implementation, and seeking a one-year deferral to 2008. The group requested the one-year postponement, in their words, to "allow companies and their independent auditors sufficient time to address the substantive, procedural and documentation challenges posed by the new interpretation."
FASB also received deferral requests and position statements from such organizations as the American Gas Association, the Investment Company Institute, T. Rowe Price and the Edison Electric Institute - each stating the nuances of FIN 48 implementation as it applies to their constituencies.
Just as we were going to press, FASB addressed the question of a FIN 48 deferral - and voted against it.
Meanwhile, the Software Finance & Tax Executives Council told FASB that the arduous valuation and tax treatment of software maintenance contracts would usher in a host of problems. Not to mention how it would affect operating subsidiaries in multiple tax jurisdictions.
Not surprisingly, investor advocates claim that those who were requesting the sabbatical on implementation were doing so only to mask suspect tax positions by keeping them off the balance sheet.
Whatever. FASB may have ruled out a reprieve for FIN 48, preserving its original implementation mandate, but you can be assured of one thing: The inclusion of "liabilities," "balance sheet" and "transparency" in any standard is almost always guaranteed to be fighting words.
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