NEWS RELEASE 02/04/13
FAF to Conduct Post-Implementation Review of FASB Standard on Accounting for Income TaxesNorwalk, CT, February 4, 2013—A 1992 accounting standard focusing on accounting for income taxes will be the subject of the next post-implementation review (PIR) conducted by the Financial Accounting Foundation (FAF). Financial Accounting Standards Board (FASB) Statement No. 109, Accounting for Income Taxes (FAS 109) (codified in Accounting Standards Codification Topic 740, Income Taxes), establishes financial accounting and reporting standards for the effects of income taxes that result from an organization’s activities during the current and preceding years.
The objective of FAS 109 is to recognize the amount of a) taxes payable or refundable for the current year, and b) deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an organization’s financial statements or tax returns. FAS 109 applies to public and private companies, and nonprofit organizations that file financial reports in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
“FAS 109 was chosen for review because it meets several of our post-implementation review criteria. When it was issued, it represented a significant change in the accounting for income taxes and affected a wide range of organizations,” said FAF President and Chief Executive Officer Teresa S. Polley. “Additionally, stakeholders frequently note that income tax accounting is a complex topic and over the years the FASB’s advisory groups have mentioned that it is an area that could be improved—both the accounting guidance and the information disclosed to investors.”
To date, the FAF PIR team has completed reviews of two FASB standards: FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information (codified in Accounting Standards Codification Topic 280, Segment Reporting) in January 2013; and FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) (codified in Accounting Standards Codification Topic 740, Incomes Taxes), in January 2012. The final reports of those studies are available on the FAF website. The PIR of FASB Statement No. 141R, Business Combinations, is currently under way.
The PIR process is intended to assist the FAF’s Board of Trustees with its ongoing efforts to evaluate the effectiveness of the standard-setting process for both the FASB and the Governmental Accounting Standards Board (GASB). The PIR process is designed to be independent of the standard-setting process of the FASB and the GASB. The FAF review staff reports to the Trustees and the FAF president and chief executive officer, but review team members are drawn from experienced FASB and GASB staff to promote a collaborative review process aimed at improving the standard-setting process.
More information on the FAF’s PIR process can be found on the FAF website. Stakeholders who would like to participate in PIR surveys conducted by the Financial Accounting Foundation should register online.
About the Financial Accounting Foundation
The FAF is responsible for the oversight, administration, and finances of both the Financial Accounting Standards Board and its counterpart for state and local government, the Governmental Accounting Standards Board. The FAF also is responsible for selecting the members of both Boards and their respective Advisory Councils.