GAAP and IFRS

Best of 2009: Accounting

The year was dominated by hot debates over fair-value accounting and a potential move to IFRS. Still simmering are new ideas about revenue recognit...
CFO StaffDecember 24, 2009

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At this time next year we may be bidding a fond farewell to U.S. generally accepted accounting principles — or we may not. Regulators are still undecided about whether to require U.S. companies to abandon U.S. GAAP in favor of international financial reporting standards. But advocates and opponents of the switch came up with forceful arguments for their positions in 2009, as reported in several of the accounting stories listed below.

Meanwhile, a rancorous debate continued over fair-value accounting rules, with standard-setters eventually delivering new guidance and new rules to settle a scorching issue. There were important developments in other areas, too, including revenue recognition, lease accounting, financial-statement presentation, auditing, and a big “dirty” secret about contingent liabilities. All of these developments and more were covered in our best accounting and auditing stories of 2009, presented here.

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Accounting


Herz: U.S. Convergence Ball Is in SEC’s Court

The decision about whether the nation’s corporations should report under international accounting standards has foundered amid a change of Presidents and a corresponding change of leadership at the Securities and Exchange Commission.


IFRS: Jekyll or Hyde?

U.S. adoption of global accounting standards would be intended to create a level global playing field, but within U.S. borders, its benefits would differ dramatically from company to company.


Private Companies Get IFRS Made Easy

At a mere 230 pages, a new version of the international accounting standards for nonpublic entities may win a big following, sooner or later.


Goodbye GAAP

It’s time to start preparing for the arrival of international accounting standards.


Dirty Secrets

Companies may be burying billions more in environmental liabilities than their financial statements show.


Critics Pan New Financial Statements

A long-planned overhaul of financial statements gets a rough reception from preparers at its initial unveiling, particularly from banks. Meanwhile, a survey says a large majority of CFOs don’t even know about the proposal.


When Is a Lease a Lease?

The answer will prove pivotal to companies’ balance sheets when a new lease accounting standard comes out.


Revenue Recognition: Will a Single Model Fly?

Elements unique to long-term contracts pose a challenge for FASB and IASB in their bid to create one standard covering all customer relationships.


FASB Kills the “Q,” Stiffens Off-Balance-Sheet Reporting

The accounting standards-setter approves rules aimed at unveiling attempts to hide losses.


Bridging the Gap on Booking Bank Loans

The U.S. and international accounting standards boards mull the divide between them on how banks should recognize changes in a loan’s fair value.


The Fair-Value Deadbeat Debate Returns

On hiatus while other fair-value questions were debated, the hotly-contested issue of why companies can book a gain when their credit rating sinks has returned to center stage.


Rule Change Lets Banks Reinvent the Past

Without directly changing fair-value rules, a new FASB rule allows banks to “roll forward” noncredit losses and avoid a hit to earnings.


Ball of Confusion: FASB Affirms Fair-Value Principles

Okaying a proposal on how to gauge the price of financial instruments in illiquid markets, the board says that preparers should use their judgment.


Why Didn’t FASB Just Say So?

In a “plain English” summary of its recent actions on fair value, the FASB proves that it can, in fact, speak plain English.


A Fair Value Antidote Is Rushed by FASB

In newly proposed guidance, board encourages companies to use more judgment — and do more work — when assessing the current value of assets stuck in an inactive market.

Auditing


Internal Audit: The Continuous Conundrum

A generally accepted definition of “continuous auditing” remains elusive, and expert practitioners remain rare. Here are some tips from the trenches for getting a program going.


Internal Auditing: The 24/7 Approach

Not satisfied with monitoring small data samples, more companies are seeking complete automation of the audit function.


Doing the Internal Audit-Management Dance

A biotherapy firm’s continuous controls monitoring program, which is essentially run by its internal audit team, is credited with creating numerous (though unquantifiable) benefits.


Most Auditors Ace Internal Controls Tests

While the PCAOB’s year-one review of its revised standard for auditing financial-reporting controls offers praise, it also outlines some problem areas.


Supreme Court to Rule on PCAOB’s Fate

The justices will hear oral arguments this fall over whether the audit firms’ regulator — and the Sarbanes-Oxley Act — is constitutional.


Audit Fees Rise, But Not by Much

The good news is that the hikes trail the inflation rate. The bad: companies are taking on more audit burdens internally.