Barry C. Melancon, AICPA president and CEO, testified before Congress that two initiatives the AICPA launched, and in which it continues to play a leading role—extensible business reporting language (XBRL) and enhanced business reporting (EBR)—are critical elements of a more relevant, reliable, understandable and timely reporting model that must be adopted for the good of the U.S. economy, the efficiency of capital markets and greater investor confidence.
“Today, investors, lenders and other users of financial information need to make decisions much faster and more often based on what is currently happening and what may happen in the future, in addition to what has occurred solely in the past,” Melancon said at a March hearing of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
The Institute has long supported improved reporting, he said. In 1993, an AICPA Special Committee on Financial Reporting called on public companies to provide investors with a significantly broader spectrum of financial information. Now initiatives such as XBRL and EBR are poised to revolutionize business reporting.
The AICPA continued its efforts to aid taxpayers affected by hurricanes Katrina, Rita and Wilma. Under an agreement between the Institute and the IRS, federal income-tax assistance offices now can refer low- and moderate-income victims of these storms to participating AICPA members for free help with complex tax issues, such as computing casualty loss deductions or amending prior-year tax returns.
Under the new program participating CPAs will provide services by telephone, mail, e-mail or, occasionally, in person. The American Association of Attorney-Certified Public Accountants also is taking part in the program.
Affected taxpayers generally can request such consultations only by visiting a local IRS volunteer income tax assistance (VITA) site ( www.irs.gov/newsroom/article/0,,id=155161,00.html).
FASB issued Statement no. 156, Accounting for Servicing of Financial Assets, amending Statement no. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The new statement simplifies the accounting for certain aspects of mortgage securitization and similar financial activities. Entities should implement the guidance as of the start of their first fiscal year that begins after September 15, 2006. An entity may adopt the guidance earlier—but only at the beginning of its fiscal year and only if it has not issued financial statements for any part of that period ( www.fasb.org/pdf/fas156.pdf).
The International Accounting Standards Board released an exposure draft (ED) of proposed amendments to International Accounting Standard (IAS) 1, Presentation of Financial Statements ( www.iasb.org). The proposal aims to help organizations more clearly present information already required under IASs. Specifically, companies would have to report income and expense data separately from equity changes resulting from transactions with their owners. The companies also would have to include in their financial statements a statement of financial position at the start of the previous reporting period. Comments are due July 17, 2006.
The International Auditing and Assurance Standards Board of the International Federation of Accountants re-exposed a draft (ED) of International Standard on Auditing 600 (revised and redrafted), The Audit of Group Financial Statements ( www.ifac.org/Guidance/EXD-Details.php?EDID=0055). The ED discusses the extent to which a group auditor should be involved in the audits of components by other auditors, regardless of whether they are employed by the group auditor’s national or international firm or network of firms. Comments are due July 31, 2006.
The Governmental Accounting Standards Board released a white paper, “Why Governmental Accounting and Financial Reporting Is—and Should Be—Different” ( www.gasb.org/white_paper_mar_2006.html), in response to occasional suggestions that cities, counties and other general-purpose governments should follow standards established for businesses. The paper explains that because governments and for-profit entities have such innately disparate goals, specialized guidance is essential if creditors, investors and other stakeholders, such as citizens and elected representatives, are to receive adequate information on the unique aspects of state and local governments’ financial performance.
The SEC will hold on June 12, 2006, the first in a series of roundtable discussions on how best to speed the development of new Web-based software to help investors and analysts obtain better financial information about companies and mutual funds ( www.sec.gov/news/press/2006-34.htm). The discussions, to be held at the commission’s Washington, D.C., headquarters, also will explore how the SEC can tailor its requirements so that company disclosures will be easier to analyze with such software. The commission seeks written feedback from investors, registrants, auditors and others on their experiences using interactive data and XBRL. To submit comments, go to www.sec.gov/news/press.shtml or send an e-mail message to firstname.lastname@example.org with “File Number 4-515” in the subject line.