There can be little doubt that in terms of accounting, the biggest stories of the year were the huge rise in momentum in the move toward the international convergence of financial-reporting standards and the rise of fair-value accounting. But the Public Company Accounting Oversight Board’s replacement of its existing internal-controls assessment standard in favor of a new, maybe improved version — AS5 — was getting a great deal of attention around the middle of 2007. For its part, too, the Securities and Exchange Commission was making news, exerting its fiscal power over the Financial Accounting Standards Board.
Because our coverage of accounting issues grew in scope to reach beyond just rules-based reporting, we’ve divided this report into subsections to make it easier to scan for the articles you want. The Convergence section, our biggest by far in reflection of the significance of the topic this year, follows the ongoing debate about the rise of a single set of global accounting rules. The Audit section takes a closer look at the professionals that scrutinize corporate books. The section on FASB looks at a few important new rules — the ones involving fair-value accounting were biggies this year — and their effect on corporations. Under the SEC heading is a group of stories probing the rulemaker’s impact on corporate accounting.
(To see all of our accounting articles, check out the accounting section of our archive.)
• Could You Switch to IFRS in Three Years?
Since it worked for Europe, a 2011 deadline for changing U.S. companies’ financials over from GAAP could be reasonable.
• How LIFO Could Stall Global Accounting
Banned in Europe, the inventor-reporting method and its tax treatment have staunch advocates in the United States.
• What If IFRS Replaced GAAP?
The SEC is asking for your opinion on whether U.S. companies should be allowed to use International Financial Reporting Standards instead of GAAP.
• The Many Interpreters of IFRS
After the International Accounting Standards Board hands off its rules to companies, who ensures the consistency of their application?
• Is FASB Fading Away?
In its response to an SEC proposal that could quicken the demise of GAAP, FASB suggests it’ll have to cede its standard-setting power.
• Auditor: Convergence Could Spur Revenue Wreck
Will U.S. tech companies lose out if foreign issuers can use international accounting standards to report here?
• Grant Thornton Fires Back at PCAOB Criticism
“We strongly disagree with the use of overly broad comments such as ‘failed to identify,’ ‘failed to perform,'” the audit firm wrote in response to the audit overseer’s inspection.
• Ding-Dong, AS2 Is Dead
The PCAOB has killed its reviled internal-control standard. Now it’s up to the SEC to pronounce it officially dead.
• AS5: More Flexible, Less Effective?
Does the PCAOB’s proposed replacement for Auditing Standard No. 2 offer too much leeway for professional judgment?
• The FAS 159 Mulligan
A loophole in a new fair-value accounting standard had investment advisers pushing clients to hide losses from investors. But most companies remained principled.
• Ready or Not, Here Comes Fair Value
The Financial Accounting Standards Board votes thumbs-down on a one-year breather for companies to comply with FAS 157.
• The Negative Side of Goodwill
FASB’s proposed business-combination rule requires companies to recognize negative goodwill immediately.
• Is the SEC a Threat to FASB’s Independence?
A new agreement between the SEC and FASB gives the regulator greater say over future board candidates. Could that open a door for political interference in accounting standards?
• Will the SEC Let U.S. GAAP Die?
When the SEC finally recognizes the use of IFRS by foreign firms, it may find that American companies want to ditch U.S. GAAP, too.
• SEC, PCAOB Pushed to Define Materiality
The new AS5 carefully avoids a bright-line definition of materiality, but both the PCAOB and the SEC are clearly feeling increasing pressure to put some hard numbers behind the definition of what is “material.”
• Fear and Misunderstanding of the SEC
Carol Stacey, who recently left an accounting job at the commission for the private sector, talks about the hot topics in the profession today, from fair value and complexity to international standards and materiality.