-Financial Accounting Standards Board to improve 'going concern' disclosures.
BANKING AND CREDIT NEWS-June 27, 2013--Financial Accounting Standards Board to improve 'going concern' disclosures(C)2013 M2 COMMUNICATIONS http://www.m2.com
27 June 2013 - US financial accounting and reporting standards-setter The Financial Accounting Standards Board said it has issued a proposal intended to improve disclosures of uncertainties related to an organisation's ability to continue as a going concern.
Under US generally accepted accounting principles, financial statements are prepared under the inherent presumption that the reporting organisation will be able to continue as a going concern. The going concern presumption is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities.
Currently, there is no guidance in US GAAP about management's responsibilities in evaluating or disclosing going concern uncertainties, or when or how uncertainties should be disclosed in an organisation's footnotes.
The proposal would provide this guidance, thereby reducing diversity in financial reporting about these uncertainties, while improving the timeliness and quality of footnote disclosures about them.
It would do so by incorporating many of the principles that are currently in the auditing standards, and by requiring management to evaluate going concern uncertainties more frequently, prescribing a threshold and related guidance for starting disclosures, requiring an assessment period of 24 months after the financial statement date, and providing a threshold for SEC filers to determine whether there is substantial doubt about an organization's ability to continue as a going concern.
The proposed guidance on the disclosure of going concern uncertainties would apply to all reporting organizations, including public companies, private companies, and nonpublic not-for-profit organisations.
Additionally, a public company that is a Securities and Exchange Commission filer would be required to evaluate and determine whether there is substantial doubt about its ability to continue as a going concern and, if there is substantial doubt, disclose that determination in the footnotes.
The proposal--including instructions on how to submit comments--and a FASB in Focus document are available on the FASB website at www.fasb.org.
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|Publication:||M2 Banking & Credit News (BCN)|
|Date:||Jun 27, 2013|
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