New M&A accounting rules not widely understood. (Financial Reporting).

A majority of senior financial executives -- 64 percent of survey respondents -- said that their transaction teams need more guidance on the implications of the new accounting guidelines released by the FASB in June. KPMG LLP polled 121 senior executives across a broad industry base at a firm-sponsored "Accounting Update Briefing" in New York City.

The two Statements of Financial Accounting Standards (SEAS 141 and 142) significantly revamp how companies account for mergers and acquisitions. Statement 141 requires all business combinations initiated after June 30 to be accounted for using the purchase method of accounting; Statement 142 replaces the requirement to amortize intangible assets with indefinite lives and goodwill with a requirement for a goodwill impairment test.

"We have always expected companies to continue to merge and acquire, regardless of the accounting principles, when the deal is the right one for stakeholders," said Brian Heckler, partner in charge of Transaction Structuring Services for KPMG. Also, 82 percent of the respondents indicated that the elimination of pooling-of-interests accounting will not impact their overall M&A activity, but that the new standards add complexity to structuring deals and the valuation of intangible assets.

Interesting to note is that 61 percent of the executives said that their companies have not estimated the impact of SFAS 141 and 142 on such key business metrics as earnings per share (EPS); return on assets (ROA); earnings before interest, taxes, depreciation and amortization (EBITDA); and effective tax rates. "These are stunning results," said Heckler, "considering the new standards will lend greater transparency to financial statements and will level the playing field for M&A activity. Ultimately management must understand these new standards, as they may allow for more innovation in structuring deals."