Auditing And Accounting Standards Board

1310 Words6 Pages
Abstract Regulators and Accounting Standards Board have long struggled with the developing comprehensive reporting standards that will improve transparency, reliability, completeness, and comparability of the financial statements prepared by the company. The need to promote investor confidence in the market makes it important to improve the financial reporting standards so that investors are able to obtain accurate, reliable and complete information in order to make informed judgments. This paper reviews recent attempts by SEC and FASB to improve the reporting of off-balance sheet transactions, variable interest entity, and non-controlling interest. The SEC as cited by Wilson Sonsini Goodrich & Rosati (2003) defines…show more content…
If the management is of the view that the known event, trend, demand or uncertainty is not reasonably likely to occur, there is no need for a disclosure of the arrangement in the MD&A. However, if the management cannot pass judgment, the company must assume that the event, trend, demand or the event will occur and determine objectively whether it will have a material impact on the financial position of the firm. The company will have to disclose if the materiality is determined. Companies must disclose their contractual obligations in a tabular format that include: • Long term debt obligations • Capital leases and obligations • Operating leases and obligations • Other long-term liabilities reported in the company’s balance sheet GAAP As at the reporting date, the company is required to disclose; the sum of the obligations, payments due with one year, payments due between one and three years, payments due between three years and five years, and payments due in more than five years. FASB Interpreatation46, Consolidation of variable interest entities (2003) defines a variable interest as a contractual ownership or other financial interest of an entity that changes with changes in the entity’s net assets. Thus a variable interest entity represents an investment that will absorb a portion of entity losses if they occur, or receive a portion of the entity residual returns if they occur (Find Law, 2016). The
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