Accounting standards

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.

The Securities and Exchange Commission has appointed two executives to prominent positions in its Division of Corporate Finance.

The Securities and Exchange Commission has weaknesses in its internal controls, according to a report by the Government Accountability Office.

The International Accounting Standards Board has decided to postpone the effective date of its new accounting standard for business combinations until July 1, 2009.

The International Auditing and Assurance Standards Board is looking for a new chairperson.

The Securities and Exchange Commission has voted to remove the requirement for non-U.S. companies to reconcile their financial statements to U.S. generally accepted accounting principles.

The Financial Accounting Standards Board reaffirmed an earlier vote against a blanket deferral of Statement 157, "Fair Value Measurements," but granted a deferral for some assets and liabilities.

The Securities and Exchange Commission is expected to drop the requirement for foreign companies that list on exchanges in the U.S. to reconcile their financial results to U.S. generally accepted accounting principles.

The Securities and Exchange Commission has received letters from accounting organizations and firms responding to its concept release on allowing public companies to prepare financial statements in accordance with International Financial Reporting Standards, some in favor and some opposed

Securities and Exchange Commission Chairman Christopher Cox met with securities regulators from Australia, Canada, China, Israel, Japan and South Korea to discuss the timeline for the implementation of interactive data for financial reporting.

The Financial Accounting Standards Board has decided to defer the effective date for FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," for nonpublic entities.

The International Accounting Standards Committee Foundation, the oversight body for the International Accounting Standards Board, has taken several steps to enhance its governance structure and allow more input from government securities regulators, as well as investors.

The Securities and Exchange Commission has released a staff accounting bulletin that revises and rescinds some of the rules for written loan commitments to make them more consistent with recent accounting rules.

Small and midsized companies are facing increased scrutiny from tax authorities both in the U.S. and in foreign jurisdictions to ensure that the transfer pricing of transactions among their subsidiaries is treated as if they were at arm's length - or what two unrelated parties would pay."Transfer pricing is something that a lot of small and medium-sized companies need to be paying attention to and thought they were under the radar in the past," said Meril Markley, a principal at UHY Advisors in Houston. "But because of FIN 48, they're really going to have to take a close look for the first time."

When the Financial Accounting Standards Advisory Council met in September to discuss the use of International Financial Reporting Standards, they found themselves answering questions with questions.FASAC, which advises the Financial Accounting Standards Board on a variety of issues, had been given the task of providing perspectives on where accounting and financial reporting might be going over the next two or three decades - with special consideration of the role of IFRS.

After a summer of discussions, the Financial Accounting Standards Board is expected to release as many as 10 documents by the end of the year or early in 2008.Susan Bielstein, FASB director of major projects and technical activities, said that the board had shown strong progress this year, especially with the completion of a business combination standard that it wrote jointly with the International Accounting Standards Board. It was the first joint standard the boards have produced, and it's expected to be released in mid-October. "It was a real milestone in the convergence process," Bielstein said.

The Internal Revenue Service has softened its opposition to contingent fees charged by Circular 230 practitioners. Originally, the IRS proposed permitting a contingent fee only in connection with an IRS examination or the challenge of an original return, or an amended return filed before a notice of examination was received.Under the final rules, a tax practitioner will be allowed to charge a contingent fee for services rendered in connection with the IRS examination of, or challenge to, an original return, or an amended return or claim for refund or credit where it was filed within 120 days of the taxpayer receiving a written notice of the examination, or a written challenge to the original return.