Financial reporting


  FASB plans to ask financial statement users, preparers, auditors, and others for feedback on how to best address concerns about its standard on accounting for income taxes.

The board also plans to ask stakeholders whether addressing those concerns should be a priority in comparison to other projects that could be undertaken to improve U.S. GAAP, FASB Chairman Russell Golden said in a letter to John Davidson and Cynthia Eisenhauer, co-chairs of the Financial Accounting Foundation (FAF) Standard-Setting Process Oversight Committee.

Golden’s letter was written in response to a FAF post-implementation review that concluded that the standard adequately resolved the issues it was meant to resolve, but may not have reduced complexity associated with accounting for income taxes.

FASB noted that the review showed that preparers and auditors find certain aspects of FASB Statement No. 109, Accounting for Income Taxes, to be operationally challenging.


  The International Accounting Standards Board (IASB) released new rules that are designed to improve how hedge accounting activities are reflected in financial statements.

The IASB changed the rules to address preparers’ concerns about the challenges of appropriately representing their risk management activities in financial statements.

More information on the project is available at tinyurl.com/nk8yxrl.


  Many companies are not making use of an optional, qualitative goodwill impairment test FASB recently introduced to enable less burdensome financial reporting, a new survey report shows.

Just 29% of public companies and 22% of private companies participating in financial advisory and investment banking firm Duff & Phelps’s 2013 U.S. Goodwill Impairment Study used the “Step 0” optional qualitative assessment for any reporting unit in their most recent testing. A total of 107 companies participated in the survey, which is available at tinyurl.com/md5o27r.

The Step 0 assessment was created to help companies determine whether often-costly quantitative goodwill impairment testing is necessary. Under the Step 0 option, a company is not required to calculate the fair value of a reporting unit unless an assessment of qualitative factors shows that it is more likely than not that the reporting unit’s fair value is less than its carrying amount.

The qualitative assessment option took effect for annual and interim goodwill impairment tests performed for fiscal years beginning after Dec. 15, 2011. In the Duff & Phelps survey, 13% of public companies and 22% of private companies said Step 0 was not cost-effective.

To address the scarcity of guidance in this general area, the AICPA recently released a guide, available at tinyurl.com/louwewb, describing best practices for testing goodwill for impairment.

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