Determining a Corporation's Health or Illness From Financial Statements Essay

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Accounting 201 and Finance301:

Accounting 201

Discussion Question: Discuss FASB and IASB. Comment on at least two specific aspects of the two standard setting boards and their role in setting accounting standards. Also, watch 2 provided YouTube videos and post comments.

FASB and IASB

The Financial Accounting Standards Board (FASB) was established in 1973 to set and improve accounting and reporting standards for private sector U.S. entities (Financial Accounting Standards Board, n.d.). Though the Securities Exchange Commission (SEC) has the power to set standards for publicly held companies, it relies on private organizations to set and improve standards, and the SEC officially recognizes the FASB's standards as legitimate standards for nongovernmental entities in the U.S. The FASB is independent of any business or organization so it can carry out its duties fairly and impartially. In order to carry out its mission, the FASB publishes the FASB Accounting Standards; along with SEC standards, the FASB codes set the national accounting and reporting standards (Financial Accounting Standards Board, n.d.).

The International Accounting Standards Board (IASB) was established in 2001 by an independent not-for-profit foundation called the IFRS Foundation to set and approve international standards of financial reporting. Just like the FASB, the IASB is independent of any business or other organization so it can fairly and impartially set and approve standards. In order to carry out its mission of setting and approving international financial reporting standards, the IASB pursues and develops a technical agenda, prepares rough and final drafts of international financial reporting standards according to the IFRS Constitution's due process standards, and improves and issues IFRS interpretations from the Foundation's Interpretations Committee (Deloitte Global Services Limited, 2014).

b. YouTube Video: Quarter close, Q4 2012: Eurozone, FASB disclosure, and other financial reporting

The YouTube Video "Quarter close, Q4 2012: Eurozone, FASB disclosure, and other financial reporting" covers several financial and accounting topics that are important in the dynamic business world. The Eurozone debt crisis affects companies even if they operate only domestically because in an interconnected global economy, they are competing with other companies who must directly deal with the Eurozone debt crisis. The video also gives 5 tips for modern accounting: during uncertain economic times, companies should revisit their accounting and reporting documents to be assured of their accuracy and transparency; communications such as the annual filing should explain to investors the reasons and implications of changes with the knowledge of management; companies that change their debt structure should carefully ensure their accounting is keeping step with those changes; business changes by relationships such as partnerships, consolidations and acquisitions can be challenging to goodwill questions about those possible challenges should be asked early to avoid surprises; and companies should not only be familiar with the new fair value measurement guidance and disclosures that went into effect in 2014 but also with SEC observations so far, which will help a company with its year-end disclosure because the SEC is looking for transparency that will give clear insight into a company's fair value measurement process.

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The video also discusses the Disclosure Effectiveness Project in which the FASB is inviting comments about whether flexible disclosures are a good idea, when flexibility should be used and how "relevance" will be defined to determine when and how a company should be flexible in its reporting. Finally, the video presents a discussion about the Guide for Accounting for Financing Transactions, which is a user-friendly system of flow charts organizing complex possibilities and standards for financing transactions. This Guide makes it easier to navigate and understand the optimal course of action in accounting (PwC U.S., 2012).

c. YouTube Video: Impact of the joint FASB/IASB leasing proposal

The YouTube video "Impact of the joint FASB/IASB leasing proposal," a joint project since 2007 to see whether there is a single model that can give a better picture of a company's finances because a lease can be an executory contract that should be reported as a periodic expense over the usage period or whether it represents an asset and a liability. The proposal is anticipated to become effective in 2017 or later. Companies should marshal their information, develop a plan for responding to the eventual accounting standard through accounting and through lease negotiations and discuss software developments with the companies' providers to ensure that the company's IT systems will be prepared when the proposal becomes a regulation (PwC U.S., 2013).

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"Determining A Corporation's Health Or Illness From Financial Statements" (2015, January 07) Retrieved April 29, 2024, from
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"Determining A Corporation's Health Or Illness From Financial Statements" 07 January 2015. Web.29 April. 2024. <
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Latest Chicago Format (16th edition)

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"Determining A Corporation's Health Or Illness From Financial Statements", 07 January 2015, Accessed.29 April. 2024,
https://www.aceyourpaper.com/essays/determining-corporation-health-illness-financial-2148404
   

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