Financial Reporting


The SEC issued Staff Accounting Bulletin (SAB) no. 108, which provides guidance on quantifying financial statement misstatements, including the consideration of the effects of the carryover and reversal of prior-year misstatements ( www.sec.gov/interps/account/sab108.pdf ). Typically, entities have quantified such errors in one of two ways—as the amount by which the current-year income statement is misstated or the amount that the current-year balance sheet is misstated. The commission staff believes companies should evaluate misstatements under both approaches and adjust their financial statements whenever either approach results in a misstatement that is material when all relevant quantitative and qualitative factors are considered.

The staff said it will not object if a registrant records a one-time cumulative-effect adjustment to correct errors, from prior years, that had been considered to be qualitatively and quantitatively immaterial, based on appropriate use of the registrant’s previously employed approach. The SAB adds section N to Topic 1, “Financial Statements,” of the Staff Accounting Bulletin series.

The Government Accountability Office issued a report, “Financial Statement Restatements: Trends, Market Impacts, Regulatory Responses and Remaining Challenges,” in response to a request from Senator Paul S. Sarbanes (D-Md.), chairman of the Senate Committee on Banking, Housing and Urban Affairs ( www.gao.gov/new.items/d03138.pdf ). The objective of the report was to provide information on the number of, reasons for and trends in restatements, their impact on the restating companies’ stock market capitalization and on investor confidence in financial reporting and the capital markets, and the resulting SEC enforcement actions. A summary is available on the Web site of the AICPA Center for Public Company Audit Firms ( www.aicpa.org/CPCAF ).

SPONSORED REPORT

How the election may affect taxation of business income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

Did you follow 2016’s biggest accounting news?

CPAs will remember 2016 as a year of new standards and new faces. How well did you follow the biggest accounting events? The 7 questions in this quiz will help you find out