FASB tentatively approved a
one-year delay in the effective date for FIN 48,
Accounting for Uncertainty in Income
Taxes, for private enterprises,
including not-for-profit organizations.
Acting on a request from the Private Company
Financial Reporting Committee for a deferral, the FASB
board is seeking public comment on a plan to delay the
effective date for all nonpublic entities to fiscal
years beginning after Dec. 15, 2007. FASB board
members agreed to take comments for 30 days on the
deferral. A proposed FASB staff position had not yet
been released by late November.
FIN 48 took
effect for fiscal years beginning after Dec. 15, 2006.
Because many private companies are not required to
file interim financial statements, private companies
generally had until the end of the first year of
adoption to comply, unless they had an earlier
contractual reporting requirement, such as debt
The deferral would
allow private companies that start their fiscal year
after Dec. 15, 2007, (typically Jan. 1, 2008) to adopt
FIN 48 in 2008 when they prepare that year’s
financials. Without the postponement, private
companies would have had to comply during 2007.
FASB reaffirmed its opposition to
a blanket deferral of Statement no. 157, Fair
Value Measurements, while agreeing
to provide a one-year deferral for nonfinancial assets
and liabilities that are not carried at fair value on
a recurring basis.
For fiscal years beginning
after Nov. 15, 2007, companies will be required to
implement the standard for financial assets and
liabilities, as well as for any other assets and
liabilities that are carried at fair value on a
recurring basis in financial statements. An exposure
draft will be issued for comment on the partial
The SEC approved rule amendments
that will allow financial statements from foreign
issuers listed on U.S. markets to be accepted
without reconciliation to U.S. GAAP if they are
prepared using International Financial Reporting
Standards (IFRS) as issued by the
International Accounting Standards Board. The rule
amendments will take effect 60 days after publication
in the Federal Register and apply to
financial statements covering years ended after Nov.
Financial Accounting Foundation
Chairman Robert Denham and FASB Chairman Robert
Herz, in a comment letter to the SEC,
voiced opposition to allowing U.S. companies
an extended period of choice between U.S. GAAP and
International Financial Reporting Standards (IFRS).
Such choice would result in a “two-GAAP system that
creates unnecessary complexity for investors and other
users of financial information,” Denham and Herz
wrote. “Permitting choice would add to the overall
complexity of our reporting system.”
chairmen suggested moving U.S. public companies to an
improved version of IFRS. The letter was a response to
an SEC concept release that proposes allowing U.S.
issuers to use IFRS as an alternative to GAAP. The
letter is available at http://fasb.org/FASB_FAF_Response_SEC_Releases_msw.pdf.
The AICPA and the U.S. Small
Business Administration signed a strategic alliance
on Nov. 1 that will provide CPAs with greater
access to SBA programs and its nationwide network. The
purpose of the SBA is to aid, counsel and protect
small business interests as well as the public
interest, a mission that SBA Administrator Steven
Preston said dovetails with the role of CPAs.
“The small business community in this country is
not only essential, it is the primary driving force in
our economy,” Preston said in a news release. “To have
a national partnership with a group like the AICPA is
incredibly important because when a small business
owner is looking for answers, when they are looking
for someone to trust, they are really in your hands as
As AICPA members serve their clients,
they will be able to draw more easily upon SBA
resources to help clients finance startups, expansions
and recovery from natural disasters. The alliance will
enable firms to work more closely with SBA resource
centers and offices for the benefit of their small
business clients. About two-thirds of the AICPA’s
44,000 member firms are sole proprietors.
information is available at www.sba.gov.
SEC Chairman Christopher Cox
focused on timetables for implementation of
interactive data initiatives during a week of
discussions with securities regulators from Japan,
China, Korea, Canada and Australia. Cox did
not comment publicly on when the SEC might mandate
XBRL filings. Other countries provided status reports
Japan. All public companies will
be required to report their full financial statements
in XBRL beginning with quarterly reporting in the
second quarter of 2008.
China. The first country to
mandate XBRL reporting, China is currently requiring
interactive data filing for the full financial
statements of all listed companies in quarterly,
half-year and annual reports under rules of both the
CSRC and the Shanghai Stock Exchange.
Korea. Beginning in October 2007,
all publicly held companies are required to file
financial statements using XBRL on the electronic
filing system of the Korean Financial Supervisory
Commission. The system allows interested
non-Korean-speaking investors to view and analyze a
company’s financial statements in English.
Canada. The Canadian Securities
Administrators began a voluntary XBRL filing program
in 2007, under which issuers can voluntarily file
financial statements in XBRL format.
implementation of interactive data for financial
reporting is scheduled for mid-2010, with pilots and
proof-of-concepts beginning in 2008.
The AICPA endorsed legislation
that would create a uniform national standard for
state withholding of nonresident income tax,
which would be especially helpful to small
businesses, as well as larger ones. The AICPA
statement outlining difficulties businesses face was
submitted to the House Judiciary Subcommittee on
Commercial and Administrative Law for its Nov. 1
hearing on the Mobile Workforce State Income Tax
Fairness and Simplification Act of 2007.
Businesses and accounting firms do a great deal of
business across state lines and many businesses and
CPAs are negatively affected by nonresident income tax
withholding laws, said James Metzler, AICPA vice
president–Small Firm Interests. “We need a simple and
uniform system governing how states apply taxes to
nonresidents doing business in their states.
Recordkeeping can be voluminous under the current
regulatory scheme,” he said.
AICPA members have an important
role to play in the official measurement of the
American economy by responding to the 2007 Economic
Census, according to Thomas Mesenbourg Jr.,
associate director for economic programs of the U.S.
Census Bureau. More than 4 million U.S. businesses
were to have received census forms in December. In a
letter to AICPA President and CEO Barry Melancon,
Mesenbourg emphasized the importance of timely and
accurate data to effective public policy and,
ultimately, to the AICPA and its members and
encouraged AICPA members to return their forms by the
legal deadline of Feb. 12. To learn more about the
Economic Census, visit http://business.census.gov.
The site contains information and tips on how to use
Census data to assess and grow business operations and
has links to sample forms.
The major federal banking
regulators released a report to Congress detailing
progress those agencies have made in eliminating
outdated, unnecessary and overly burdensome
The report, issued by
member agencies of the Federal Financial Institutions
Examination Council, examines the easing of
requirements for regulated institutions to file
reports on currency transactions and suspicious
activities under the Bank Secrecy Act and streamlining
customer identification requirements under the USA
The agencies address numerous
issues, including regulations on the accounting
treatment of fees for international loans and the
application of various provisions of the
Sarbanes-Oxley Act to different types of financial
institutions. The report, issued jointly by the
Federal Reserve, the FDIC, National Credit Union
Administration, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision, is
available at www.ots.treas.gov/
The SEC, with three other
regulatory organizations, proposed changes to
strengthen the institutional framework of the
International Accounting Standards Committee (IASC)
Foundation, the parent organization of the
International Accounting Standards Board (IASB).
The European Commission, Financial Services
Agency of Japan, International Organization of
Securities Commissions and the (U.S.) SEC proposed to
use the IASC’s 2008 constitution review to put forward
changes to strengthen the foundation’s governance
framework, while emphasizing the continued importance
of an independent standard-setting process.
Central to this effort is the establishment of a
new monitoring body within the governance structure of
the IASC Foundation to reinforce the existing public
interest oversight function of the IASC Foundation
trustees. One key objective is to have the monitoring
body meet regularly with IASC Foundation trustees to
discuss, review and comment on the IASB’s work
The monitoring body would, together
with the IASC Foundation trustees and in consultation
with the trustee appointments advisory group,
participate in the selection of trustees. The
monitoring body would also be responsible for the
final approval of trustee nominees and would have the
opportunity to review the trustees’ procedures for
overseeing the standard-setting process and ensuring
the IASB’s proper funding. To see the complete
statement, visit www.sec.gov/news/press/2007/2007-226.htm.
The U.S. Chamber of Commerce
released an online survey of 177 members showing
that, despite recent reforms, Sarbanes-Oxley (SOX)
section 404 disproportionately burdens small
businesses. The study found that more than
83% of respondents have already engaged auditors with
respect to SOX 404(a) and more than 58% have done so
with respect to SOX 404(b).
The study also
found that more than half of the companies responding
with less than $75 million in market value will spend
more than 3% of net income on SOX 404(a). Sixty-three
percent anticipated a cost increase in the next year
due to compliance with 404(a) and 404(b). Finally,
more than 58% of the respondents believed that SOX 404
will not help detect and prevent fraud. To download a
copy of the study, visit www.uschamber.com/publications/reports/0711soxsurvey.htm.
In response to the survey, the Center for Audit
Quality issued a statement noting that the experience
of the past several years suggests that SOX 404 has
provided significant benefits to investors, companies
and the capital markets. The CAQ’s view is that any
adjustments in section 404 implementation to reduce
costs can and should be accomplished without exposing
investors to new risks and must strike the right
balance between that and making the audit more
effective and more efficient.
IFAC celebrated its 30th
anniversary during World Accountancy Week,
Dec. 2–8. On Dec. 4, a forum in New York City
organized around the theme “Government, the
Accountancy Profession and the Public Trust: Current
Initiatives and Future Challenges” helped raise
awareness of the valuable role that professional
accountants play in contributing to economic growth
and development worldwide. As part of this forum,
former AICPA Chairman and IFAC Deputy President Robert
Bunting moderated a discussion on governance,
oversight and business growth. Other prominent
speakers included representatives of government,
standard-setting bodies, regulators, accounting firms
and public policy organizations. AICPA President and
CEO Barry Melancon attended the event representing the
Institute, which is a member body of IFAC.
more information, go to www.ifac.or .