Accounting standards

Lately, it seems like the concepts of fair value measurement and mark-to-market accounting have been taking a lot of blame in the hand-wringing over what is causing the fallout in the credit and mortgage securities markets.

It is my belief that despite the various newsletters, publications and sections on the AICPA Website, what the AICPA is doing that directly impacts its members can be publicized better by the AICPA.

The Internal Revenue Service said it would soon issue guidance to help businesses determine how to use the special 50 percent bonus depreciation allowance included with the recent economic stimulus legislation.

The International Auditing and Assurance Standards Board has revised the international standards requiring management to provide auditors with a clear written statement that auditors have received all the information they need.

CPAs who conduct valuations in the normal course of their practices are now required to comply with detailed standards.

Racing to find political common ground on estate tax policy before the Bush administration tax cuts expire, congressional leaders are urging Republicans and Democrats to “think outside the box” when considering reforms.Among the alternatives placed on the table for discussion during recent Senate Finance Committee hearings: proposals to tax the beneficiaries of inheritances, rather than estates, as well as options under which estate taxes would be levied based on the heir’s “access to sophisticated tax advice.”

When the Governmental Accounting Standards Board issued Statement 34, requiring government-wide accrual accounting and modified accrual accounting for governmental funds, it improved financial reporting enormously, but inevitably created some confusion.Part of that confusion was over one of the most widely used pieces of government financial information — fund balance. Grappling with vague definitions of “reserved” funds, state and local governments have been reporting restricted net assets and reserved fund balances inconsistently.

Two bills proposed in the Senate last year that take aim at tax havens and the U.S. taxpayers that operate in them have been given greater impetus by the recent European and U.S. probes into accounts in Liechtenstein that were alleged to hide assets from national taxing authorities.S. 396, introduced by Sen. Byron Dorgan, D-N.D., would prevent American companies from deferring the imposition of a second layer of tax on their foreign-source income if they operate in selected low-tax nations. It would amend the Internal Revenue Code to treat certain controlled foreign corporations created or organized under the laws of a tax-haven country as domestic corporations for tax purposes. It sets forth a list of “tax-haven” countries, and grants the Treasury authority to remove or add a country from the list.

Despite a recently issued safe harbor now available for like-kind exchanges of vacation properties, the Internal Revenue Service continues to keep taxpayers guessing on the precise boundaries of the law itself.Last September, the Government Accountability Office came out with a critical report on like-kind exchanges in which it complained that the IRS needed to give taxpayers more guidance on like-kind exchanges of second homes and vacation retreats. The GAO claimed that the IRS had agreed with its findings and had promised to release more specific guidance. The latest IRS response seems to fall short of that commitment.

Until 1991, the accounting profession was largely guided by historical cost, transaction-based accounting.Granted, fair market value and historical cost at the point of the transaction were deemed equivalent, provided that arm’s-length transactions were involved. However, those making decisions — investors, auditors and regulators — grasped that unless someone gave and accepted consideration for something, its underlying value was arguable.

As investors and regulators increasingly question the role of fair value measurements and mark-to-market accounting in contributing to the global economic downturn, a group of speakers weighed in at a panel discussion sponsored by the CFA Institute Centre for Financial Market Integrity.

CPAs who conduct valuations in the normal course of their practices are now required to comply with detailed standards.

The Securities and Exchange Commission is offering investors a new interactive tool for comparing the costs, risks, investment strategies and past performance of mutual funds using Extensible Business Reporting Language.

The Treasury Department has released a report on The Changing Nature and Consequences of Public Company Financial Restatements as part of an effort to encourage U.S. capital markets competitiveness.

The American Institute of CPAs has issued revised Standards for Performing and Reporting on Peer Reviews, along with interpretations of those standards.

The Securities and Exchange Commission has filed securities fraud charges against five former San Diego officials who failed to adequately disclose problems with the city's municipal bonds in 2002 and 2003.

Cain to Chair Leading Edge Alliance

Charges were dismissed against former Arthur Andersen partner Daniel F. Stulac in a legal battle lasting three-and-a-half years over the defunct Big Five firm's audits of Peregrine Systems.

CCH has arranged with BNA Tax Accounting to put the BNA Accounting Policy Practice Series on CCH's Accounting Research Manager service.

The International Accounting Standards Committee Foundation's XBRL Team has released the near-final version of the IFRS Taxonomy 2008, translating International Financial Reporting Standards into Extensible Business Reporting Language.