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FAF TEAM CONCLUDES STANDARD ON UNCERTAIN INCOME TAX POSITIONS GENERALLY ACHIEVED ITS PURPOSE |
| Source: | FAF | | Country: | US | | Date: | 13/01/2012 | | Contributor: | Bob Schneider | | Web: | http://www.accountingfoundation.org/home |
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The Financial Accounting Foundation (FAF) has concluded its first formal “post-implementation review” of an accounting standard set by the FASB, which the FAF oversees. The review concluded that a 2006 accounting standards interpretation intended to increase relevance and comparability in reporting information about income tax uncertainties generally achieves that purpose, although some stakeholders believe the standard could be improved.
The review of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) (codified in Accounting Standards Codification Topic 740, Incomes Taxes), was undertaken by an independent FAF team working under the oversight of the FAF Board of Trustees.
Based on its research, the review team concluded that:
(1) FIN 48 has resulted in more information about uncertain income tax positions being reported than had been the case before its implementation.
(2) Investors generally are using the improved information in their investment decision process.
(3) Financial statement preparers are accounting for and reporting income tax uncertainties more consistently and such information is more relevant than it had been prior to FIN 48.
(4) On balance, the benefits that FIN 48 provides to investors in the form of improved consistency and reporting of income tax uncertainties outweigh its costs.
The Trustee’s oversight responsibility does not extend to recommending standard-setting action, which is the sole, independent responsibility of the FASB. To improve the standard-setting process, the post-implementation review team recommended that the FASB:
(1) Continue its efforts to improve user input in the agenda and early deliberation phases to evaluate alternatives addressing user needs
(2) Include in each standard a thorough discussion about the need for new financial reporting guidance and the benchmark characteristics of useful financial information considered
(3) Include in each standard a thorough discussion about the new guidance’s benefits and beneficiaries, the associated costs to affected principal stakeholders, and how benefits and costs are evaluated and assessed
(4) Follow consistently its established policies and procedures related to re-exposing all or part of a proposed standard.
Additional information about this post-implementation review is in the press release. The post-implementation review report is also available online. |
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