FASB Proposes Delay Of Interpretation 48 For Non-Public Firms

by Glen Shapiro LawAndTax-News.com, New York

09 January 2008

The US Financial Accounting Standards Board (FASB) is seeking comment on a new proposal to delay the implementation on Interpretation 48 for non-public companies, which seeks to clarify the reporting of uncertain income tax positions in company financial reports.

In a FASB Staff Position (FSP) announced on January 8, the Board has proposed to defer the effective date of Interpretation 48 for nonpublic entities to fiscal years beginning after December 15, 2007. Interested parties have until January 18, 2008, to submit written comments on the proposed FSP.

The Board proposed a deferral in response to a recommendation made by the Private Company Financial Reporting Committee (PCFRC), which said many nonpublic entities, in particular nonpublic pass-through entities, required more time to study and apply the provisions of Interpretation 48. The FASB statement explained that nonpublic entities that have already adopted the provisions of Interpretation 48 would not be eligible for the deferral.

The amendments contained in the proposed FSP clarify that the provisions of Interpretation 48 have been adopted if the nonpublic entity has issued financial information prepared in accordance with US GAAP to third parties.

Interpretation 48 is an interpretation of FASB Statement No. 109, Accounting for Income Taxes, which increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in income taxes. It makes recognition and measurement more consistent, as well as offering clear criteria for subsequently recognizing, derecognizing, and measuring such tax positions for financial statement purposes.

The FASB has been the designated organization in the private sector for establishing standards of financial accounting and reporting since 1973. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants.

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