Technical Accounting Issues

In the U.S., we all live and work in the most complex and highly regulated reporting environment in the world. It is no longer enough to record the debits and credits consistently and maintain a clean set of books on an accrual basis. The reporting requirements for most companies require a keen understanding of new accounting pronouncements and valuation techniques for everything from issuing stock options and recording contingent liabilities to revenue recognition and off-balance-sheet transactions.

Issues We’re Tracking

Hudson’s technical accounting experts are committed to monitoring all of the latest changes and keeping our clients current on the critical developments that may impact them. The following paragraphs are only two examples of the myriad of technical research we maintain for clients.

FASB Codification

This multi-year development will go into effect beginning the latter half of 2009 and has been described as a major restructuring of U.S. accounting and reporting standards for Generally Accepted Accounting Principles (GAAP). The Financial Accounting Standards Board’s (FASB) intent in developing the Codification is to simplify and consolidate all of the authoritative information pertaining to GAAP into one single source outside any specific requirements or guidance issued by the Securities and Exchange Commission (SEC). The Codification supersedes all existing non-SEC accounting and reporting standards previously in use. On a go-forward basis, company filings (10-K, 10-Q, etc.) and other related information will need to be revised to reflect the new standards and principles as referenced in the Codification. At this time, the Codification is not all-inclusive and clients need to be aware that there are a number of areas that remain outside of this first release and are “grandfathered in” under the old standards until a later date. Hudson continues to monitor these changes and is prepared to assist clients in updating their filings and making the appropriate revisions.

IFRS

Roadmap to International Financial Reporting Standards (IFRS) Convergence Maybe Slowing

President Barack Obama’s newly selected chairman of the Securities and Exchange Commission (SEC), Mary Schapiro is signaling a “go slow” approach to the IFRS Roadmap that former SEC Chairman Christopher Cox laid out in November of last year. During Schapiro’s Senate confirmation hearings she said “I will not be bound by the existing roadmap that’s out for public comment.”
 
Schapiro has extended the public comment period on the 165 page IFRS Roadmap for an additional 60 days from the initial deadline of February 19, to April 20. This was to allow CFOs and their accountant’s more time to address the impact assessment and related costs, which the SEC in November estimated at $32 million (.125% to .13% of revenue) for each of the 110 companies who are potentially eligible to early adopt in 2009.
 
Cost is not the only issue, lack of confidence in handing over the reins to the International Accounting Standards Board (IASB) as the standard setter for accounting procedures is of concern. Schapiro seems to take issue with IFRS and the IASB from her comment at her confirmation hearing when she stated “I have some concerns about IFRS standards generally,” and in a follow-up letter to Congress, “American investors deserve and expect high standards of financial reporting, transparency and disclosure along with a standard-setter that is free from political interference and that has the resources to be a strong watchdog. At this time, it is not apparent that the IASB meets those criteria, and I am not prepared to delegate standard-setting or oversight responsibility to the IASB.”
 
Other competing priorities that are slowing progress and more specifically taking the SEC’s attention away from IFRS is the need to respond to the current financial crisis as well as other matters like assessing the impact of the alleged Bernard Madoff Ponzi scheme.

SEC Roadmap

Media Sources:

• 'SEC Pushes Back IFRS Roadmap'
  CFO.com
  2/4/2009
• 'IFRS Roadmap Slams into Reverse'
  WebCPA.com
  3/11/2009
• Securities and Exchange Commission. 'Roadmap for the potential use of financial statements prepared in Accordance with International Financial Reporting Standards by U.S. Issuers'
  11/14/2008