For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
May 4 — Accounting rulemakers plan to focus in the next several months on exactly how—and which—companies should start to report what can be significant amounts of tax abatements, grants, low-interest loans and other forms of government assistance they receive.
The Financial Accounting Standards Board on May 4 began to wrestle with the reporting specifics and related issues, including possible application of proposed disclosure rules to nonprofits.
FASB, in what is nearly a two-year-old project, wants to fill a void in accounting for enterprises' reporting on government assistance.
Such aid includes the millions of dollars in property tax abatements provided to automakers and other manufacturers to locate in a particular state or community. Investors and others have suggested that information on the awarding of such government aid needs to be more transparent and of better quality.
Vice Chairman James Kroeker said last year that the annual totals for local, state and federal assistance to companies are “astounding.” FASB's staff found that in 2011, more than $500 billion was extended in individual grants by the federal government alone, he said.
In a draft standard issued in November, FASB has so far outlined a path in which only profit-making entities would apply the potential reporting prescriptions. In addition, the board would confine the planned reporting requirements to footnote disclosures.
However, many public companies, accounting practitioners and FASB's main advisory council argue that the board should aim for requirements to also measure and recognize government assistance—and not follow the disclosure-only path. This approach would produce an accounting standard much sooner, they argue.
At its May 4 meeting, FASB discussed materiality, among other issues. It restarted a weighing of the pros and cons of particular rulemaking approaches, including how long it would take to complete a recognition and measurement effort.
Kroeker suggested that floating a proposal for comprehensive recognition and measurement could take about three years and might encounter resistance, depending on the kind of change envisioned.
The board also discussed companies' concerns about confidentiality and potential competitive disadvantage that companies might encounter if details of some terms of government assistance are disclosed.
FASB Chairman Russell Golden and the board's staff suggested that worries about confidentiality could be overcome by providing more generalized, less aggregated information on assistance agreements.
There are ways “to give investors information without giving total details of everything,” Golden said. “So I don't think that confidentiality is a total impediment to making this improvement.”
To contact the reporter on this story: Steve Burkholder in Norwalk, Conn., at firstname.lastname@example.org
To contact the editor responsible for this story: Cheryl Saenz at email@example.com
A handout on the government assistance accounting issues FASB discussed May 4 is at http://src.bna.com/eHC.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)