IFRS versus US GAAP

At the Accounting Principles blog, Malcolm McKay recently looked at the differences between US GAAP versus the IFRS systems of accounting. He pointed out that according to Audit Integrity, there are no noticable differences between the two systems. He also states that US GAAP has tools that allow for better reporting. What do you think? Is it important to join the rest of the world and keep books in the same accounting method or look towards US GAAP, which according to reports, allows for better analysis?

An Objective Look at International Financial Reporting Standards (IFRS), the report by Audit Integrity, can be read here.

Contingent Liabilities

Another Accounting TimeBomb looks at contingent liabilities in today's post. The article defines a contingent liability as "a possible obligation depending on whether some uncertain future event occurs, or a present obligation but payment is not probable or the amount cannot be measured reliably."

The article points to contingent liabilities as a reason for the current credit problem facing the world today and states that investors should be aware of contingent liabilities before they invest in a company. Read the full article here.

Should states open up accounting to the public

In a recent editorial at PennLive, they express the need for states to open up their public accounting records to the public. The tax payers should know what their taxes are being spent on. They can also begin to have a say on the budget cuts, because it's their money that is funding the state, therefore the public should have a say on what says and what goes.

What do you think? Should State accounting records be opened to the public?

Will principle based accounting improve financial reporting?

In a recent article at The Vancouver Sun, they look at Canada's current switch of public companies to the IFRS accounting system. They believe that the standards are important, but one must also consider the quality of the accounting and financial statements that are in use. They did a study and found out that a principle based approach to accounting can improve the reporting, but the auditors must also have a principle based approach to auditing as well. Read the full article to see how they found that accounting was affected by the different approaches.

Businesses won't be taxed on personal use of cellphones

According to Yahoo!, the IRS would like to repeal the law that states businesses or employees must pay taxes on the personal use of business cell phones. IRS Commissioner Doug Shulman told Congress that advances in technology have made this tax obsolete. Read the full article here.

Obama encourages universal accounting standards

According to WebCPA, Obama released a White Paper yesterday encouraging reform so that American companies have the same standards of accounting by the end of the year. Obama believes that it would allow for better supervision of financial firms. This white paper also calls for the creation of the new Consumer Financial Protection Agency. Read more about the whitepaper here.

Lilly China adds to staff

According to China Daily, Pharma giant Lilly China will begin to add nearly 2,000 positions to its company, including accounting and R&D. Read more about Lilly China and the other companies planning to grow their Pharma companies here.

Capital Standards under review

According to Reuters, there are new standards that could affect the way banks look at off-balance sheet vehicles. This could cause banks to have to move assets throughout books and affect their assets.

Some financial firms created special entities separate from their balance sheets to avoid reporting requirements or to reduce the amount of capital they needed to hold to satisfy regulatory requirements. As the financial storm gathered, uncertainty about some of those vehicles helped undermine confidence in banks and accelerated the financial crisis.

The new standards are aimed at improving accounting and disclosure associated with those vehicles.

Read the full story here.

IFRS and the IT world

In a new article at Computer World, they look at the upcoming decision on converting the United States' accounting system to IFRS, which is regarded globally as the universal accounting standards. This will: help provide transparency information to investors, make it easier to understand financial statements, and help companies make more efficient investment decisions. The decision will be made in 2011 as to whether to adopt the process, and all conversions to the system will have to take place by 2014. The article looks at how CIOs will have to change their current practices. Read it here.

Mark Olson to retire

Mark Olson, the Chairman of the Public Company Accounting Oversight Board, has announced that he will retire July 31. This board polices the US Audit Industry. For more on Olson's work throughout his time on the board, read here.

Pharma deals with taxes and working overseas

In a recent blog post at the Wall Street Journal Health Blog, they look at what different Pharma companies are facing when they go abroad to conduct business.

The dispute has to do with something called “earnings stripping,” in which a multinational company reduces its taxes by claiming interest deductions for payments to a related overseas unit. The company claims deductions on its U.S. tax return, but no money ultimately leaves the parent company’s coffers, and publicly reported profit doesn’t change. The WSJ explains the nitty gritty. Glaxo didn’t comment, but in court filings has said the payments were properly classified as tax-deductible interest.

Read the full article here.

Vermont to Drug Companies, Document Pay to Docs

The Vermont state government is looking to signing requiring drug and device makers to make public all of the money they give to doctors and others in health care. According to the New York Times, each drug and device maker must document the names and amounts given to medical practitioners. Sarah Rubenstein reports that, the state has already been out front when it comes to disclosure of drug-company pay to doctors, publishing an annual report on compensation such as consulting and speaker fees, travel expenses, gifts and food. The law being pushed by Vermont's government not only includes device makers; but it bans all free meals and will require specifics on contributions to individual doctors, the paper says. An exception: Pay for clinical research on products under FDA review does not have to be disclosed.

You Business Impact Assessement

At the IFRS USA blog, they suggest conducting a impact assessement. How will your financial statements be affected by the new accounting system. The IFRS USA blog provided a list:

• The FASB & IASB have several topics on their convergence Agenda including:
• Financial Statement Presentation (Performance Reporting)
• IFRS 2 Share-based Payment Amendment – group cash-settled share-based payment transactions Impairment
• Income Taxes – Reconsideration of IAS 12
• Insurance Contracts – Phase II (Comprehensive Project)
• Joint Ventures – Reconsideration of IAS 31 Leases
• Liabilities (was part of Business Combinations – Phase II)
• Post-employment Benefits including Pensions
• Rate-regulated Activities
• Related Party Disclosures
• Revenue Recognition
• (IFRS for) Small and Medium-sized Entities (also referred to as Private Entities and Non-publicly Accountable Entities)
• Intangible Assets Extractive Activities IFRS XBRL Taxonomy
• Conceptual Framework Project Update
• Business Combinations Project Update
• Financial Statement Presentation
• Revenue Recognition Project Update

Are CFO’s confused over IFRS?

Dennis Howlett writes, there’s a lot of talk about IFRS implementation in the US but the survey results suggest there is a significant amount of eduction to be delivered. If professionals are unclear about the requirements or its impact, it’s almost impossible for them to form an opinion as to the appropriateness of its application.

The survey that Howlett refers to was from a Grant Thornton study on attitudes to IFRS, the particular excerpt can be found on Howlett's post here.

Read Howlett's entire article by clicking here.

The future for US accounting

In a recent report at WebCPA, they look at the current push to have the USA transition from the GAAP accounting system to IFRS. Industry leaders and accounts are currently calling for a more certainty in the transition between the two. Another roadblock may be the views of Mary L. Schapiro on the plan of adoptoin of the new system.

D.J. Gannon, national leadership partner at Deloitte & Touche’s IFRS Center of Excellence, stated:
“They want certainty. Five to seven years is sufficient time for most people to get through what they have to get through.”

Read the full article here.