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US Accounting Standards Subject To Review

by Mike Godfrey, Tax-News.com, Washington

22 February 2012


Accounting standards governing financial reporting for business combinations, 'operating segments', and deposit and investment disclosures will be the next subjects of post-implementation reviews conducted by the Financial Accounting Foundation (FAF), the oversight body of the US accounting standard setters, the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).

The FASB sets accounting standards for companies, both public and private, and not-for-profit organizations, while the GASB sets standards for state and local governments. The post-implementation review (PIR) process is intended to assist the FAF’s Board of Trustees with their ongoing efforts to evaluate the effectiveness of the standard-setting process for both the FASB and the GASB on an independent basis.

The standards selected for review are:

  • FASB Statement No. 141R, Business Combinations (FAS 141R) - which requires an acquiring organization to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquired organization at the acquisition date, measured at their fair values as of that date, with limited exceptions;
  • FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information (FAS 131) - which requires that public companies report financial and descriptive information about their reportable operating segments; and
  • GASB Statements No. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, and No. 40, Deposit and Investment Risk Disclosures - which require note disclosures about deposits and investments, including related credit risks. In addition, Statement 3 also provides accounting guidance for repurchase and reverse repurchase agreements.

"The FASB and GASB standards selected for post-implementation review represented significant and important accounting changes when issued and continue to provide important information today to investors, stakeholders, and other users," FAF Chairman John Brennan commented. "We look forward to assessing whether the intended financial reporting objectives underlying these standards are being met, while also obtaining stakeholder feedback on the application, usefulness, and effectiveness of these standards set by our Boards."

TAGS: generally accepted accounting principles (GAAP) | tax | business | law | accounting | corporate governance | international financial reporting standards (IFRS) | United States | financial reporting | standards

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