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Harmonization and Financial Reporting - Coursework Example

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Harmonization and Financial Reporting

That seemed far from a sure thing last spring, w. hen the Financial Accounting Standards Board (FASB) solicited comments on the AICPA's new "comprehensive "model f business reporting" and so endowed it with a faint whiff f reality. The timing seemed right. At the Securities and Exchange Commission (SEC), commissioner Steven M.H. Wallman was already lending tacit support to the concept by publishing articles and hosting conferences on his own ideas for an expanded system that would include improved disclosure f intangible assets. Meanwhile, SEC chairman Arthur Levitt had just successfully lobbied the Financial Accounting Foundation (FAF) to give one f the seats held by the Financial Executives Institute (FEI) to a public-sector trustee. The FAF oversees FASB, f course, and what small voice preparers had in directing the views f FASB was further diminished. Finally, many preparers had concluded that FASB, as demonstrated by the onslaught f new standards it had issued in recent years, was hardly worried about complaints that financial executives were overburdened.
And yet, like a baseball team that has just captured a wild-card ticket to the playoffs, the preparer community appears to have enjoyed a turn f luck. After reviewing the AICPA's arguments for a new reporting model and listening to comments from users and preparers f financial statements, both in written and oral testimony, FASB chairman Dennis Beresford has concluded that, for now anyway, it's just too much.
"While it is dangerous to generalize about such letters and meetings," Beresford says, "my feeling is that most f our constituents aren't interested in wholesale changes to our current financial reporting system." And FASB, it seems, is not interested in tackling any major overhaul f the status quo. "My prediction," says Beresford, "is that FASB is going to be quite cautious about expanding its role beyond traditional financial statement matters."

The Complicating Factors
FASB has good reasons for tabling the issue. For one thing, Beresford's second five-year term expires in June, and many observers think the Board will be reluctant to take on any major new projects until a new chairman is installed. In addition, FASB's current agenda is jam-packed with such projects as derivatives disclosure, segment reporting, and comprehensive income.
While FASB agreed to review the future f financial reporting as part f its first strategic plan, adopted last April, so far it has been reluctant to for-realize the creation f a new financial reporting model as a working project. And whatever decision is made about the future f reporting has to be made with an eye toward possible U.S. acceptance f new international accounting standards--which isn't expected for at least several more years.
All in all, this is not what the AICPA had in mind when its Special Committee on Financial Reporting, chaired by Edmund Jenkins, issued its voluminous report a little over two years ago. The committee said then that current financial statements were no longer providing users with the information they needed to make smart credit and investment decisions, and were ...Show more

Summary

Worried about ever-expanding financial reporting requirements Well, you can relax-a little. The long ball hit by the American Institute f Certified Public Accountants (AICPA) in late 1994 in the form f its far-reaching proposal for a new financial reporting model appears to be dropping inside the fence…
Author : lconroy
Harmonization and Financial Reporting essay example
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