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Summer 2009
Fair value accounting and reporting gained attention in April 2009 when the Financial Accounting Standards Board addressed guidance issues in three newly released FASB Staff Positions (FSPs).
The FASB had been under intense pressure, from a variety of different sources, to provide additional application guidance, along with enhancing disclosures, related to fair value measurements and impairments of securities. The proposed documents had an inordinately short exposure period so that the guidance could be finalized on a timely basis.
Knowing what is expected when the auditors enter your business to assess the risks of material misstatements in your financial statements creates a good opportunity for advance preparation. Your awareness of what the auditors are looking and testing for should help your business obtain an unqualified opinion.
End users of financial statements have expressed concerns about the way reporting entities account for lease arrangements.
As a result, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are working together to change the authoritative technical literature. With these changes, financial statements will more accurately reflect the substance of lease accounting transactions.
“It was the best of times; it was the worst of times. …”
Exactly 150 years after Charles Dickens penned A Tale of Two Cities, he is still half right – we may indeed be in the worst of times economically. Conducting an audit engagement in the current business climate is about as risky as being an aristocrat in Paris during the French Revolution.
Most people have little experience or know-how when it comes to reading a financial statement. For some, it seems a foreign language; for others, a task best left to someone else.
At some point, almost everyone in the business world will need to read and understand a financial statement or, more accurately, a set of financial statements.
The challenge of implementing SFAS No. 157, Fair Value Measurements, is significant for any entity, but not-for-profit organizations might face unique issues in applying the guidance.
Those involved in management of reporting entities have been in the recent past – and will be in the foreseeable future – tackling some relatively difficult implementation issues associated with the accounting authoritative literature.
Now, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are looking at changing the landscape as to what constitutes the reporting entity itself. Essentially, while in the preliminary stages of work, they are considering changes to the conceptual underpinnings related to what a reporting entity is.
Frank Sinatra was called the Chairman of the Board when he sang his hit song “My Way.”
But since the post Enron-WorldCom debacle and the more recent Bear Stearns and Lehman Brothers subprime meltdown, the philosophy of “Old Blue Eyes” may no longer be the way to conduct corporate board business, especially during an audit.
Avoiding “the final curtain” should be the ultimate goal of any corporate board member.
Over the past several months, many have gone from asking if International Financial Reporting Standards (IFRS) will be permitted or required in the United States to when IFRS will be required to be used as the primary U.S. financial reporting framework.
The answer to the “when” question became clearer on Aug. 27, 2008, when the Securities and Exchange Commission announced a possible roadmap to transition U.S. issuers to IFRS as issued by the International Accounting Standards Board (IASB).
As the ripple effect associated with converging U.S. generally accepted accounting principles with international accounting guidance becomes more of a tidal wave for reporting entities, now is the time to heighten awareness of the international guidance.
Little did anyone – issuers, financial statement preparers, users, educators, regulators – know the significant impact the 2002 commitment to converge U.S. generally accepted accounting principles and International Financial Reporting Standards would have on financial reporting in the United States and around the globe.
Thirty years later, fear of a job headed toward obsolescence doesn’t apply to the new roaming internal auditor. In fact, the working environment for internal auditors is headed toward expansion. Since the passage of the Sarbanes-Oxley Act, the Institute of Internal Auditors has climbed from more than 80,000 members in 2002 to approximately 160,000 in June 2008.
These articles are published for the use of our clients, advisors and friends. The technical information they contain is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. For additional information, please contact our firm.
© 2009 CPAmerica International
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