Accounting standards

Financial Accounting Standards Board Chairman Robert Herz envisions a day when FASB will become part of the International Accounting Standards Board, but there are some hurdles to overcome first.

The Public Company Accounting Oversight Board voted to issue for public comment a proposed policy statement that would allow it to rely on audits done by oversight bodies abroad on non-U.S. firms.

The U.S. Supreme Court issued a unanimous decision that will allow railroads to challenge state methods for determining the value of railroad property, as well as how those methods are applied.

The Financial Accounting Standards Board has issued two statements as it continues on the road to international convergence: on business combinations and on noncontrolling interests in consolidated financial statements.

The American Institute of CPAs’ Professional Ethics Executive Committee has issued an exposure draft of a proposed new interpretation that warns CPAs they should follow the requirements of governmental bodies, commissions or other regulatory agencies on indemnification and limitation of liability agreements with a client, or run the risk of discrediting the accounting profession.

As the subprime mortgage meltdown grows, some experts are starting to see the resulting fallout rivaling corporate scandals of earlier this decade, like Enron, that prompted the passage of the Sarbanes-Oxley Act.

The Financial Accounting Standards Board has released its preliminary views on financial instruments with the characteristics of equity in an effort to simplify a patchwork of 60-plus pieces of guidance.

The Internal Revenue Service and the Treasury Department issued a notice that allows taxpayers to make corrections for operational failures in complying with rules for nonqualified deferred compensation, but only when the failures are unintentional.

A survey of accounting industry leaders from around the world found overwhelming support for convergence of accounting standards.

An official with the European Union said that U.S. companies with stocks listed on European exchanges will not be forced to conform to International Financial Reporting Standards, even as IFRS moves closer to convergence with U.S. generally accepted accounting principles.

Dave Scudder has been following developments in auditing standards closely.

Auditors at some of the largest accounting firms are working on tougher standards for valuing the assets of banks in an effort to calm jittery investors.

It began in college, continued in law school, and still exists today, my fascination with court and disciplinary opinions that provide an inside view of something the involved parties would rather had never come to light. The most recent one is a PCAOB disciplinary order involving an accountant who worked for KPMG.

While the word is that defined-benefit plans are no longer in favor, they can still provide a tax savings for the right client.“A lot of the press would lead you to believe that defined-benefit plans are on the way out,” said Karen Shapiro, chief executive of Dedicated DB, a San Mateo, Calif.-based provider of such plans. “But for some small-business owners, it’s a terrific tax strategy.”

In a special area on its Web site (in a Q&A on home foreclosure and debt cancellation), the Internal Revenue Service advised, “Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended.”Also, in recognition of the important role that the “insolvency exception” plays in excluding a beleaguered homeowner’s forgiveness-of-indebtedness income, the site further advised, “Consider the tax consequences before foreclosure.” This article explores what planning can be done to maximize the use of the insolvency exception to reduce or eliminate forgiveness-of-indebtedness income for the individual caught in the current mortgage financing or similar credit squeeze.

The Securities and Exchange Commission Statement of Policy reaffirming the status of the Financial Accounting Standards Board as a designated private-sector standard-setter (Release Nos. 33-8221; 34-47743; IC-26028; FR-70) recognizes FASB’s financial accounting and reporting standards as “generally accepted” accounting principles for purposes of the federal securities laws.As a result, registrants are required to comply with those standards in preparing financial statements filed with the commission, unless the commission directs otherwise. The SEC has emphasized the responsibility of FASB to consider international convergence, principles-based standards, timeliness, and cost-benefit issues in pursuit of high-quality accounting standards, as appropriate in the public interest and for the protection of investors. Official positions of FASB are determined only after extensive due process and deliberations.

The American Institute of CPAs has given a thumbs-up to a Securities and Exchange Commission plan that would allow U.S. corporations to abandon generally accepted accounting principles and report their financial results using international accounting standards.But critics warn that a shift to International Financial Reporting Standards would drive up audit costs for U.S. companies, lower the quality of information available to investors, and put smaller accounting firms at a distinct disadvantage.

One of accounting’s most complex and significant projects — the codification of the country’s generally accepted accounting principles — is about to step into daylight.After four years of intense and technically complex labor, the Financial Accounting Standards Board is about to release the massive compilation of standards, statements, issues, interpretations, bulletins, positions, guides, abstracts and opinions.

Labeling it the “Mother of all Tax Reforms,” Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, has introduced a bill aimed at repealing the alternative minimum tax and cutting the top corporate tax rate while raising taxes in other areas, including on the salaries of hedge fund and private equity fund managers.The $1 trillion plan would reduce the top corporate rate from its current 35 percent to 30.5 percent.

The Governmental Accounting Standards Board has issued a statement that requires government endowments to report their land and other real estate investments at fair value.