One third of public companies did not satisfy the minimum requirements of disclosure of their tax reserves last year as required by new rules put in place by the Financial Accounting Standards Board.
Seigel & Associates LLC, a tax reserve advisory firm founded by former Internal Revenue Service chief counsel Stuart E. Seigel, analyzed the disclosures made in 2008 by 790 companies, comprising all public companies with annual revenues of at least $2 billion. The findings appear in the firm’s annual Seigel Tax Reserve Report.
“We have noted throughout the year that the Securities and Exchange Commission has made inquiries to numerous companies concerning their disclosures,” said Seigel & Associates president J. Brad McGee in a statement. “The level of SEC scrutiny in this area is likely to increase as the commission intensifies its review of business reporting requirements in response to the mounting concerns and issues dealing with the disclosures of financial and accounting irregularities.”
The firm tracks compliance with FASB’s FIN 48 disclosure requirements for accounting for uncertainty in income taxes by means of a qualitative measure that it calls the Seigel Index. “We had expected that the results of our compliance evaluation might improve during the year, but it did not,” McGee added. “The percentage of reporting companies that did not meet the minimum disclosure requirements rose from 28 percent in the first quarter to 55 percent in the fourth quarter.”
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