FASB Plans To Save Some Time and $$

by Kevin McGarry 15. February 2012 16:00
  FASB is listening to its constituents. In response to feedback from respondents, FASB has put forth a proposal intended to reduce costs and simplify the guidance for testing indefinite-lived intangible assets, other than goodwill for impairment. Currently under Topic 350, Intangibles-Goodwill and Other, indefinite-lived intangible assets are required to be tested for impairment annually, or more frequently. In addition to these frequent tests, guidance for evaluating impairment indicators for long-lived tangible assets included in Topic 360, Property, Plant, and Equipment must not be ignored. However, responding to feedback, FASB decided to simplify the guidance testing. There were many concerns about the recurring cost and complexity of calculating the fair value of indefinite-lived intangible assets when the risk of impairment is unlikely. Therefore, it was suggested that the Board consider a qualitative approach or other alternative approaches for assessing indefinite-lived intangible assets for impairment. Under the proposal, Topic 350, Testing Indefinite-Lived Intangible Assets for Impairment, an organization can assess qualitative factors to determine whether performing the quantitative impairment test is necessary. This would save the organization from having to calculate the fair value of an asset unless the qualitative assessment shows that it is “more likely than not” that the asset’s fair value is less than it carrying amount. The amendments would be effective for annual and interim impairment tests performed for fiscal years beginning after June 15, 2012, and early adoption would be permitted. For more information, see FASB’s website.
Categories: Tax

Significant Support for Incorporating IFRS into GAAP

by Ken Urish 17. November 2011 13:33
In a letter to the SEC dated November 15, 2011, the Financial Accounting Foundation (FAF) announced that it supports the incorporation of IFRS into U.S. GAAP “as the appropriate path forward for the continued development of high-quality, investor-focused, international financial reporting standards.” FAF is the independent, private-sector organization with responsibility for the oversight, administration, and finances of the Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB and their Advisory Councils. FAF expressed its support for an incorporation approach that “advances improvements to U.S. GAAP and furthers the comparability and consistency of high-quality, investor-focused financial reporting standards throughout the globe.” Toward that end, it has recommended a number of modifications to the SEC’s proposed approach to IFRS incorporation. The proposed FAF approach is based on the premise that, over time, international standards will become the foundation of U.S. GAAP. Significantly, FAF believes that its proposed approach complements the SEC’s primary responsibility of facilitating investor protection in the U.S. capital markets, and that it reinforces the SEC’s goal of setting standards that provide necessary financial information to investors in our capital markets.
Categories: Assurance

What’s Next – New Standards for Private Companies

by Laura Lewis 12. July 2011 15:58
Financial Accounting Standards Board (FASB) has identified several factors that indicate major differences in the financial reporting needs of public companies versus private companies or governmental entities. This is an initial assessment that comes from comments over two years from dozens of interested stakeholders gathered by the Board. From these differences, FASB will be able to establish a “differential framework” that will be used in determining if different financial standards will be created to apply to private companies. The framework will be used by the Board to decide when and how to modify specific U.S. GAAP accounting standards for private company use. “This work is an important step forward in the FASB’s effort to develop a set of criteria for evaluating when accounting or disclosure standards should be different for private companies,” said FASB Chairman Leslie F. Seidman. “This process demon­strates our commitment to better serving the needs of without sacrificing the quality and fundamental level of comparabil­ity that are the touchstones of the U.S. accounting system and U.S. capital markets.” The significant differences include: the types of users, access to management, investment strategies, ownership structures, accounting resources and education. What’s next? FASB will continue to solicit input from those using, preparing and auditing financial statements of public companies. In addition, the board will expose a draft of the proposed differential framework for industry feedback.
Categories: Assurance