NEWS RELEASE 03/20/12
FASB Responds to Financial Accounting Foundation's Post-Implementation
Review Report on FIN 48
Norwalk, CT, March 20, 2012—The
Financial Accounting Standards Board (FASB) today issued its response to the
Financial Accounting Foundation's (FAF) Post-Implementation Review (PIR) Report
on FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes
(FIN 48).
"The FASB is pleased with the PIR team's finding that FIN
48 is resulting in more consistent and useful information for investors and
other users of financial statements," said FASB Chairman Leslie F. Seidman.
"The FASB welcomes the PIR team's recommendations to continue to improve
our processes and we are taking steps to make enhancements in those areas. While
the FASB does not plan to undertake a separate project to review FIN 48 at this
time, the Board plans to consider the technical findings in future efforts to
simplify our standards, converge them with International Financial Reporting
Standards, or both," Seidman added.
In its response, the FASB noted that
the PIR Report findings affirm the overall effectiveness of FIN 48. In
particular, stakeholder feedback indicates that FIN 48 has resulted in more
consistent recognition and measurement of uncertain tax positions and more
relevant reported information about income tax uncertainties. Most preparers
said that they did not incur significant implementation and compliance costs.
The FASB said that it welcomes the PIR team's recommendations for
improving the standard-setting process, including suggestions that the FASB
involve investors earlier in the process, more completely describe the Board's
cost-benefit analysis, and elaborate on how the Board applies its criteria for
reexposing decisions reached in redeliberations.
The Board said that the
criteria for a review or reconsideration of FIN 48 were not met, based on the
criteria established in the FASB Rules of Procedure. However, the FASB
said it will consider the PIR Report technical findings in a review of whether
simplifications or modifications in U.S. GAAP are warranted for private
companies and in its analysis of the remaining differences between U.S. GAAP and
International Financial Reporting Standards, in particular, IAS 12, Income
Taxes.
"With this response from the FASB, we complete our first
Post-Implementation Review," said John J. Brennan, chairman of the FAF Board of
Trustees. "The Trustees believe that this process provides critically important
feedback in the standard-setting process and we're pleased with the overall
result. We'll take what we've learned from this first effort and use it to
improve the process as we move forward with our next accounting standard
reviews."
The FASB's full response to the FIN 48 PIR Report is available
on the FASB
website.
The FASB issued FIN 48 in June 2006 to reduce
diversity in practice in recognizing, measuring, and reporting uncertainties
relating to income tax positions. The review of FIN 48 (codified in Accounting
Standards Codification Topic 740, Incomes Taxes), was undertaken by an
independent FAF team working under the oversight of the FAF Board of Trustees.
The team's formal report is available on the FAF
website.
The PIR process is designed to be independent of
the standard-setting process of the Financial Accounting Standards Board (FASB)
and the Governmental Accounting Standards Board (GASB). The FAF review staff
reports to the Trustees and FAF president, but members are drawn from
experienced FASB and GASB staff to promote a collaborative review process aimed
at improving the standard-setting process. The review staff tested the initial
review process by selecting one FASB and one GASB standard, with the FIN 48
standard as the first test.
About the Financial Accounting
Foundation
The FAF is responsible for the oversight,
administration, and finances of both the Financial Accounting Standards Board
(FASB) and its counterpart for state and local government, the Governmental
Accounting Standards Board (GASB). The Foundation is also responsible for
selecting the members of both Boards and their respective Advisory Councils.
About the Financial Accounting Standards
Board
Since 1973, the Financial Accounting Standards Board has
been the designated organization in the private sector for establishing
standards of financial accounting and reporting. Those standards govern the
preparation of financial reports and are officially recognized as authoritative
by the Securities and Exchange Commission and the American Institute of
Certified Public Accountants. Such standards are essential to the efficient
functioning of the economy because investors, creditors, auditors, and others
rely on credible, transparent, and comparable financial information. For more
information about the FASB, visit our website at www.fasb.org.