Comprehensive Income Is an International Issue
How Companies Report Income (JofA, May98, page 45) offers an excellent review of the requirements of FASB Statement no. 130, Reporting Comprehensive Income . CPAs also should be aware that the following standard setters are working on the question of how best to report financial performance:
- The U.K. Accounting Standards Board in Financial Reporting Standard 3, Reporting Financial Performance .
- The New Zealand Financial Reporting Standards Board in Financial Reporting Standard 2, Presentation of Financial Reports .
- The International Accounting Standards Committee in International Accounting Standard 1 (revised), Presentation of Financial Statements .
There are differences among these and the FASB statement, but some important similarities as well:
- They all require reporting on an all-inclusive basis.
- They all permit or require that some items be reported outside the income statement.
- Except for the IASC statement, they all require reporting of a total measure of financial performance.
A working paper, Reporting Financial Performance: Current Developments and Future Directions, is the result of a joint effort by an informal group of accounting standard setters known as the G4+l. (Ordering information is available at www.iasc.org.uk.) FASB is a member of the G4+l; one of the principal authors of the paper is L. Todd Johnson of the FASB staff. This type of collaboration should do much to bring greater uniformity to accounting and reporting throughout the world.
As a personal aside, I very much prefer the phrase reporting financial performance to the phrase reporting comprehensive income. The former seems to signal a topic that would be of interest and importance throughout the business and investment communities; the latter, a topic of interest only to accountants.
John P. McAllister, CPA, PhD,
Chair and Professor of Accounting,
Coles College of Business,
Kennesaw State University/
Metro-Atlanta
Kennesaw, Georgia
