The Financial Accounting Foundation (FAF) will conduct post-implementation reviews on standards regulating financial reporting for business combinations, operating segments and investment disclosures.
Standards selected for review, as announced in a FAF news release, are:
- FASB Statement No. 141R, Business Combinations, which requires an acquiring organization to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired organization at the acquisition date. Those items are measured at fair value as of the acquisition date, with limited exceptions.
- FASB Statement No. 131, Disclosures About Segments of an Enterprise and Related Information, which requires that public companies report financial and descriptive information about their reportable operating segments.
- GASB statements No. 3, Deposits With Financial Institutions, Investments (Including Repurchase Agreements), and Reverse Repurchase Agreements, and No. 40, Deposit and Investment Risk Disclosures. Those standards require note disclosures about deposits and investments, including related credit risks. Statement No. 3 also provides accounting guidance for repurchase and reverse repurchase agreements.
“The FASB and GASB standards selected for post-implementation
review represented significant and important accounting changes when
issued and continue to provide important information today to
investors, stakeholders and other users,” FAF Chairman John J. Brennan
said in a statement. “We look forward to assessing whether the
intended financial reporting objectives underlying these standards are
being met, while also obtaining stakeholder feedback on the
application, usefulness and effectiveness of these standards set by
our boards.”
Post-implementation reviews are a relatively new process created to help the FAF trustees evaluate the effectiveness of the standard-setting process for FASB and GASB. FAF is the parent organization of FASB and GASB.
Just one post-implementation review has been completed thus far. The first review was performed on FASB Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes, and the results were released in January.
The review concluded that FIN 48 increases relevance and comparability in reporting information about income tax uncertainties. But the review reported concern from some preparers that the judgments involved in accounting for income tax uncertainties result in information that is not comparable and may not represent amounts expected to be paid.
—Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.
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