There have been calls by financial statement users for increased transparency with regard to financial statements. It seems the regulators are taking those demands seriously, not just by enacting standards aimed at increasing transparency, but also by ensuring that the standard-setting process is more transparent.
That was obvious last week when the Financial Accounting Standards Board considered whether it should delay implantation of FASB Interpretation (FIN) No. 48, "Accounting for Uncertainty in Income Taxes," which requires companies to follow a very prescribed format to determine the likelihood that a position taken on their tax return will be, in fact, likely to be successful, effective for years beginning after Dec. 15, 2006. The determination affects what it shown on their financial statements.
Years ago, to find out what was going on at a FASB meeting you had to travel to Norwalk, Conn. It is much easier now. On the morning of the meeting, I simply went online at www.trz.cc/fasb/archive.html and heard the portion of the meeting that dealt with the possible one-year delay in the implementation of FIN 48. I recommend those interested in the subject do the same.
It will provide remarkable insight to how FASB operates, and FASB”s relationship both the SEC and the AICPA.
The FASB staff indicating that there were more than 400 letters received on the subject surprised me. But what surprised me even more was a staffer’s dismissive comment that many were form letters asking for the one-year delay, sent by members of the Tax Executives Institute.
Equally interesting was that during the discussion one of the board members inferred the request for delay was probably not caused by difficulty in implementation, but from a desire by some to not fully disclose uncertain tax positions.
Overall, what I found so fascinating, as the seven board members closed with a unanimous vote against delaying the effective date, was the immediate transparency of the process. Any interested party had instant access to the proceedings. This greater transparency was extremely refreshing and educational. For example, I expect the next time that the Tax Executives Institute takes a position; it will advise its members not to use a form letter.
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