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Financial Reporting, Taxation, & Accounting
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8/11/2010
XBRL Opens Doors For Auditors In Governance, Risk Management, And Compliance
Although public companies have been filing financial statements in electronic format since the early 1990s, many auditors still rely mainly on printed documents. Auditors who have yet to use XBRL format are missing a chance to improve efficiency and enhance their auditing accuracy, write accounting professionals John Chironna and Ernst Zwikker.
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6/10/2010
SEC Staff Comfortable With New Flexibility In Non-GAAP Disclosure
The SEC staff has updated its Compliance and Disclosure Interpretations on Reg. G, offering issuers some wiggle room when they publish non-GAAP measures of financial information. Although not a sweeping change, the new flexibility lets companies reveal information that may be meaningful to investors but not in strict compliance with GAAP. Attorneys David Lynn and Nilene Evans have a warning: be consistent.
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4/12/2010
Reg. G (Unfortunately) Eliminates Useful Data From SEC Filings
Reg. G was never intended to control what data a public issuer must disclose, only the manner in which disclosure appears. Yet issuers are finding that whether the SEC accepts a non-GAAP measure may depend upon which staff member reviews the filing. That unpredictability and inconsistency leads issuers to simply omit the data, a result that Sarah Johnson deems unfortunate for investors.
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3/15/2010
Targets For US GAAP And IFRS Convergence
Domestic and international regulators are radically altering the financial reporting process. The FASB and the IASB have been working to converge US GAAP and IFRS (although even the definition of "convergence" is not yet clear). Converged accounting standards for consolidations, revenue recognition, FMV, and leases are on the horizon, accounting professional Paul Munter explains.
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3/15/2010
Detecting And Eliminating Errors When Using XBRL Technology
Accounting professors Jon Bartley, Al Chen, and Eileen Taylor review the mistakes that XBRL users have made in applying the new taxonomy to financial statements. Errors in tagging, mapping, extension, and validation may distort the financial data on which analysts and investors rely, but the authors make recommendations on how to avoid the common ones.
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1/15/2010
Voluntary Early Adopters Of XBRL Send Investors A Message
Now that the SEC is requiring issuers to use XBRL in financial statements by 2011, professors Joseph Callaghan and Robert Nehmer wonder why some companies voluntarily converted before tagging was mandatory. The results of their research on early adopters? Not what was expected.
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1/15/2010
The Sticky Matter Of Investigating Fraud Allegations
When a company faces an allegation of fraudulent financial reporting, how should the directors proceed to investigate the potential firestorm? Greg Regan and Kristin Rivera, forensic accounting consultants, provide a step-by-step approach to tackling this problem and the factors to weigh when considering an investigation of fraud.
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12/11/2009
New Standards Alter The Timing Of Revenue Recognition
The FASB issued two accounting standards updates in October 2009, which will affect how companies selling products with multiple deliverables or with embedded software will recognize revenue. Bruce Pounder, a financial reporting consultant, indicates that the new measures may greatly impact the timing of revenue recognition.
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11/19/2009
Debating Whether Accounting Rules Caused The Banks To Fail
Fair value accounting has finally come to roost. The path was rocky: First, the FASB required marking to market for financial assets in portfolios. Then banks and other financial institutions were forced to join in, even as the market plummeted. The result? Massive losses and asset writedowns. Congress applied pressure, and the FASB hastily modified. Attorneys Thomas White and Nia Monrow recount the tale.
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10/15/2009
Conversion To IFRS Takes Planning
US companies converting to IFRS must begin planning now while remaining mindful of the internal controls and operational systems risks. Steve Arnold, a CPA and advisor, warns compliance professionals that the three years of parallel reporting mandated by the SEC will be a major challenge. For an effective transition, begin to coordinate the in-house specialists as soon as possible.
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9/10/2009
Daunting New Audit Standards For Risk Assessment
Accounting professor Ronald Clark summarizes the AICPA's current Risk Assessment Suite, which requires auditors to assess a corporate client's risk factors and thereby reduce the likelihood of a misleading financial statement. The auditing standards stress evaluation and documentation, upgrading the old standards by adding an audit risk model.
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7/14/2009
Size Matters When It Comes To Determining Whether A Misstatement Is Material
Misstatements in financial reports are actionable only if they are material. Sounds simple, but what constitutes materiality? Should you measure it with the quantitative or the qualitative standard? Law professor James Park dislikes them both. He prefers a more rational recipe, with just a pinch of persistence.
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4/10/2009
Tough Economy Seeing An Increase In Revenue Recognition Problems
From channel stuffing to roundtripping, executives desperate to deliver favorable performance numbers are finding creative but perhaps inappropriate ways to recognize revenue. Since most recognition tricks will be exposed eventually (and financials will have to be restated), securities litigators Pravin Rao and Jade Lambert urge executives to take a conservative approach to revenue recognition.
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4/10/2009
Use XBRL To Improve Internal Reporting As Well As External Filings
As of January 2009, all US issuers must provide accounting and financial reports tagged with interactive data, known as eXtensible Business Reporting Language. XBRL consultant Gianluca Garbellotto outlines the available taxonomies and suggests that companies avoid bolting on and other short-term fixes. Instead, they should use XBRL GL and generate reports for both internal and external use.
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3/12/2009
As Stocks Decline, Companies Bid Farewell To Goodwill
The current financial crisis has depressed many good companies' stock prices to below book value. One way to tidy up the corporate balance sheet is to write off goodwill. Observers disagree on whether a writeoff is a wise move. S.L. Mintz offers both sides of the equation.
