Accounting standards

Completing their first major joint project, the Financial Accounting Standards Board and the International Accounting Standards Board have agreed on two new standards on accounting for business combinations.FASB member G. Michael Crooch termed the new guidance “a significant convergence milestone [that] improves reporting while eliminating differences” between the standards that were previously promulgated by the two boards.

There may be 2-D bar codes in the future of paper-filed returns, if recommendations from the Government Accountability Office are followed.In its end-of-year report on last year’s tax season, the GAO said that the Internal Revenue Service exceeded the previous year’s performance by most measures. However, it noted a number of opportunities to realize additional savings and increase tax compliance, with the barcoding of paper returns among them.

In the last few days before Congress adjourned for 2007, a number of tax law changes finally made it through the two chambers and on to President Bush. The president has either already signed or indicated his willingness to sign each piece of legislation. Several of the provisions enacted will have an impact on 2007 tax returns.Even with this flurry of activity, a number of pieces of legislation, including most of the energy-related tax proposals, an agriculture bill with tax provisions, military tax relief, and the extension of expiring provisions, as well as a fairly extensive list of offsetting revenue raisers, got left off the table and will be addressed again in 2008. The following is a summary of each of the tax laws enacted, the principal provisions, and the impact, if any, on 2007 tax returns.

On my first visit to Washington, D.C., I almost missed the Jefferson Memorial because there were so many other memorials to look at. The same can be said of Financial Accounting Standards Board projects, because several projects are currently in progress. However, one project, referred to as the FASB Codification, is a "must see" because it is sure to create significant changes for anyone who researches accounting or financial reporting issues.The FASB Codification project is designed to present all of the relevant U.S. accounting and financial reporting literature in a single, authoritative, integrated offering in an online, real-time database. That is, the goal is to provide all generally accepted accounting principles in one location for financial professionals to access and use.

The Financial Accounting Standards Board has agreed to defer the effective date of Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," for nonpublic entities to years beginning after Dec. 15, 2007.

Andrew McKelvey, the former CEO of job listing provider Monster Worldwide, has agreed to pay $275,989.72 to the Securities and Exchange Commission to settle charges of stock options backdating.

The Financial Accounting Standards Board began testing a codification of U.S. generally accepted accounting principles that reorganizes thousands of U.S. GAAP pronouncements to make them easier to find.

Edgar Online and Microsoft announced a deal under which Edgar Online will provide financial filings from the Securities and Exchange Commission's Edgar database and other content to Microsoft's MSN Money, while Microsoft will provide advertising around Edgar Online's content.

The chief executives of the six largest accounting firms pushed for global convergence of accounting standards, better audit quality and principles-based accounting standards at a symposium.

The Securities and Exchange Commission may be moving toward greater acceptance of the professional judgment of accountants in interpreting financial standards, and that can’t happen soon enough.

A key outside advisory committee wants the Securities and Exchange Commission to be more open to accepting an accountant's judgment in interpreting standards.

A new report finds the cost of compliance with Sarbanes-Oxley Section 404 internal control audit requirements for smaller public companies is actually about 14 percent lower than the Securities and Exchange Commission's original estimates.

The Tax Governance Institute plans to host a video Webcast on the new tax preparer standards on Jan. 15 from 1 pm to 2:30 pm EST.

The International Accounting Standards Board has issued a revised version of its standards for accounting for business combinations such as mergers and acquisitions, in coordination with the Financial Accounting Standards Board, in a move that will highlight the expenses of business combinations that used to be considered assets.

The Mortgage Bankers Association has written to the Financial Accounting Standards Board asking for more flexibility in accounting for troubled mortgages to help prevent foreclosures.

The Internal Revenue Service has established rules for substantiating lump-sum charitable contributions made through the Combined Federal Campaign or similar programs such as a United Way campaign.

Thomson Tax & Accounting's PPC brand has issued a guide to help auditors cope with Statement on Auditing Standards No. 112, "Communicating Internal Control Related Matters Identified in an Audit."

In partial deference to corporate appeals, the Financial Accounting Standards Board has agreed to allow a one-year deferral for part of the implementation of Financial Accounting Statement 157, Fair Value Measurements.Investors have long called for financial statements that report market values - observable or calculated - and FASB constituents in the corporate sector have generally supported the concept. But after a year of preparing to implement FAS 157, corporations went to the board to complain that implementation had turned out to be prohibitively difficult.

The alternative minimum tax isn't the only tax that will continue to surprise taxpayers if Congress fails to act on its repeal. The estate tax, currently set to expire in 2010, will return with a vengeance to a full 55 percent in 2011 if Congress does nothing.The Joint Committee on Taxation estimated that in 2009 there will be 9,600 estates subject to the estate tax. While that number falls to zero in 2010, it will jump to nearly 62,000 in 2011, with increases every year thereafter.

Since this is our first column of the New Year, it may be particularly appropriate to look back into 2007 to try to predict some of what will happen in 2008. The history of important tax developments that took place in 2007 is rich and varied. Shakespeare's "What is past is prologue" was never so apt.In that spirit, we have selected 10 developments as standouts in terms of their impact on the future, and especially on 2008 tax strategies. We explain each of these top 10 below. And, of course, respecting the difficulty of prioritizing just 10 2007 tax developments as most significant, we conclude by listing several more as runners up!