Current issues in accounting

International accounting and auditing issues that have been noted by the staff are: Impact of SFAS and on Pro Forma Financial Statements The pervasive effects of the new accounting standards on business combinations and purchased intangibles, and the unusual manner in which companies must transition to those standards, present special problems for pro forma financial statements that are required by Article 11 of Regulation S-X to depict the effects of recent or probable business combinations.

Thus Rule 12h-5 eliminates the need for subsidiary issuers or guarantors to request exemptive or no-action relief from Exchange Act reporting. Amended Rule includes specific requirements applicable to recently acquired guarantors.

Direct transfers of amounts between the allowance for loan losses and other credit loss allowances are not appropriate.

Ethical Issues Facing the Accounting Profession

Piecemeal adoption of this Statement is not permitted. That SAB identifies disclosures that a registrant should provide regarding the impact that recently issued accounting standards will have on its financial statements when the standard is adopted in a future period.

However, the safe harbor in Item 7 e 3 v of Schedule 14A applies only to information required to be disclosed under Item 7 e 3 and the safe harbor in Item c of Regulation S-K applies only to information required to be disclosed by Items a and b of Regulation S-K and, therefore, neither safe harbor covers disclosures required by Item 9 e but included in the audit committee report.

Consequently, the staff encourages entities to consider carefully all effects of implementing the Statement in forming a decision as to when to adopt the Statement. General considerations The determination of the allowance for loans losses requires significant judgment.

One significant focus of staff reviews currently is to evaluate whether registrants have complied completely with all the disclosure requirements of SFAS Disclosures that explain the allowance in terms of potential, possible, or future losses, rather than probable losses, suggest a lack of compliance with GAAP and are not appropriate.

All disclosures required by paragraph 44 of FAS should be provided. Procedural discipline means that a registrant should apply its methodology in the same manner regardless of whether the allowance is being determined at a higher point or a lower point in the economic cycle.

A liquidation preference may have little or no value if a company is in the process of registering its common stock and the preferred stock is mandatorily converted to common stock on a one-for-one basis at the IPO date.

Ethical Issues Facing the Accounting Profession

For example, registrants that have embedded derivatives or investments in debt securities or that have issued long-term debt should discuss risk exposure if the impact of reasonably possible changes in interest rates would be material.

Other Compliance Issues Registrants should remember to identify the products and services from which each reportable segment derives its revenues, and to report the total revenues from external customers for each product or service or each group of similar products and services.

A fourth Andersen partner, a regional practice director, settled administrative proceedings finding that he had engaged in improper professional conduct. In that Joint Letter, the agencies agreed to provide parallel guidance on loan loss allowance methodologies and supporting documentation.

Some firms failed to identify and address the lack of disclosure of related party transactions. Quantitative disclosures in paragraph The SAB states that the staff has no objection to the use of a percentage threshold as an initial assessment of materiality, but exclusive use of such thresholds has no basis in law or in the accounting literature.

The General Accounting Office has made similar observations about the loan loss allowance practices of depository institutions, as it reported in its October Report to Congressional Committees, Depository Institutions: Rather, it requires condensed consolidating financial information in all situations where SAB 53 permitted summarized financial information.

Current Issue In Accounting (Accounting Theory) - Essay Example

Blowing the Whistle One final ethical dilemma accountants may face is the thorny question of when to blow the whistle on a company or a division that's unethically manipulating or misstating its numbers.

To assure balance and usefulness, disclosures about commodity derivatives should be related to the company's exposures in the underlying commodity. To date, 55 disciplinary orders have become final and were made public. One significant focus of staff reviews during will be to assure complete compliance with all the disclosure requirements of SFAS They also would be required to provide a brief, narrative description of the material features of each plan adopted without security holder approval during the last completed fiscal year.

Conflicts of Interest Conflicts of interest can be an especially difficult ethical issue to recognize. On October 12, the staff published Frequently Asked Questions and Answers which responds to inquiries received from auditors, preparers and analysts about how the accounting literature and guidance in SAB should be applied www.

The Role of the PCAOB The statutory mission of the PCAOB is to oversee the audits of public companies issuers to protect the interests of investors, and further the public interest in the preparation of informative, accurate, and independent audit reports.

Government Accountability Office, "Accounting Profession: Annual cash flows associated with interest payments, as well as principal payments, should be evident from the presentation. Confidentiality Issues Like doctors and lawyers, accountants naturally spend much of their time dealing with confidential information.

Changes in accounting estimates must be accompanied by the disclosures specified in paragraph 33 of APB When that happens, the temptation to lean on your accountant to fudge the numbers can be hard to resist. If contemporaneous documentation can not be demonstrated, an auditor will be unable to determine whether the company has, after the fact, selected the hedged item or transaction, or the method of measuring effectiveness, to achieve a desired accounting result.

Download file to see previous pages Accounting is considerably a measurement tool since it assesses the value and returns of the company in comparison to the costs.

The measurement of fair values (FV) of assets is inclusive of numerous aspects, for example, market risk or credit risk. Jun 29,  · When you run a business it's easy to think of your accounting staff as glorified mechanics, people with specialized skills needed to keep.

Accounting Today is a leading provider of online business news for the accounting community, offering breaking news, in-depth features, and. Bloomberg BNA recently released its Tax & Accounting Outlook report that covers the gamut of legislative, state, international, and tax administration issues.

But it also highlights the following four key accounting issues that could impact practitioners and companies in the new year. The Journal of Accountancy is the ultimate resource for today’s CPA, providing daily professional and regulatory updates, breaking news and videos.

This site uses. Other Current Accounting and Disclosure Issues A. Disclosure, Accounting and Auditing Alerts In a letter to Arleen Thomas of the AICPA, dated October 13,the Commission's Chief Accountant, Lynn Turner, identified a wide assortment of current disclosure, accounting and auditing issues that financial managers, auditors and audit .

Current issues in accounting
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