Answer: It is reasonable to exempt small companies with revenue under $250 million from filing in XBRL format for a short period (3-5 years) for the cost of preparation, but it is not a good idea to implement this exemption for long time. 1) XBRL has significant benefits for the transparency improvement of financial report. As Du and Vasarhelyi et al., (2013) stated, there has been over one decade of studies and evaluations on Internet-facilitated financial reporting in general and XBRL in particular (Ashbaugh et al. 1999; Debreceny et al. 2002; Ettredge et al. 2002; Debreceny et al. 2005; Kelton and Yang 2008; Debreceny et al. 2010). These studies explored, advocated, and generally supported the idea of using the Internet to …show more content…
Potential users include regulators, accountants, banks, analysts, investors, management, and any other member of the financial information supply chain. The XBRL report can offer a platform to use an interactive language to communicate with each other informatively. The third benefit is the XBRL process and savings. Based on the old financial reporting system, company information is hosted on their website in PDF or HTML format, and this information is costly to retrieve, manipulate and utilize by other interested and concerned parties. Companies spend billions of dollars on this method of data presentation and transfer. Implementation of XBRL will result in cost savings and the data will be cheaper, better, and faster. 2) The cost of XBRL report for small companies The main reason for this exemption is the cost to prepare and file the XBRL report. But, as the two papers mentioned in the question argued, “A recent study of smaller filers by the AICPA showed that the median cost to file in XBRL in the US for the companies that would be covered by the exemption is USD $8000 annually, covering the detailed tagging of 3 quarterly financial statements and 1 annual financial statement, so it’s fair to say that the savings claims by the proposal’s supporters are somewhat overblown.” It is not too much. So, in my opinion, some potential costs would happen in this time, but these costs would decrease step by step. The first cost is the psychological cost for small
Section 58 requires a CPA to comply with GAAP and GAAS. This requirement is included in the regulation so the BOA can discipline any CPA that does not comply with GAAP or
The globalization of business activity has resulted in the need for a uniform set of accounting rules in all countries. With U.S. corporations doing so much business in other countries, it is imperative that the SEC and international regulatory boards devise a set of rules and regulations that would benefit both parties. If this did not happen, international companies would be able to do whatever they wanted without repercussion because of the discrepancies in the differing sets of rules. Accomplishing this universal set of rules would allow companies to list securities in any market without having to prepare more than one set of financial statements. There have been so many
SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the
You can order anything from books, movies, dinner, household items. You can even do our banking and manage your finances over the web. Eventually accountants are bound to evaluate the medium and experiment with providing their current and expanded services over the Internet (Kogan, Sudit, Vasarhelyi. 2009).
I think it will not apply for a quite long period of time, because it already not applies for the IFRS rule. This accounting method could let the country experience how companies could avoid some of the tax expenses and it is pretty much like the accounting knowledge that could be accumulated for the future. Based on my personal idea, in the near future the LIFO method will not no longer apply to GAAP, because the avoid tax expenses is a kind of loss for the country. Although the event I chose is a relatively old one, but there are still a lot of argues about
Elements of the Act were phased in over time. Those companies with a market capitalization between $75 million and $700 million whose fiscal years closed between November 15, 2004 and February 28, 2005 were granted an extension of 45 days on the internal controls portion of SOX financial reporting frameworks which were to be in place and operational for their first fiscal year-end reports after November 15, 2004, then all quarterly reports thereafter. Smaller companies had until their first fiscal year ending on or after July 15, 2005, to comply, and it will be for the first fiscal
By June 8, 2016, the Board had completed its initial deliberations on the disclosure requirements for income taxes. The Board reversed its previous decision and decided not to require an entity to disaggregate the cumulative amount of indefinitely reinvested foreign earnings for any country that represents at least 10 percent of the total cumulative amount. Instead, the Board decided to require disclosure of the aggregate of cash, cash equivalents, and marketable securities held by foreign subsidiaries. The Board made adjustments to the language used in the exposure draft replacing the term public entity with the term public business entity as defined in the Master Glossary of the Codification.
This practice could help eliminate the legal liability to smaller third party financial statement users that would not be as largely affected as other larger
This new system would allow for the finance office to create pretty well any type of report that you could look for,
Recognition of the possible stance the IRS will take is the first step to evaluating whether the matter should be published as an addendum to the financial statements. The Securities and Exchange Commission (SEC) made multiple changes on how a company needed to report and disclose relevant financial information to provide transparency to investors due to the birth of Sarbanes Oxley (SOX). Consequently, public companies’ management must reveal their knowledge of any current or potential financial concerns “that might materially affect their financial statements” on their annual 10-K and quarterly 10-Q filings (Chasen, 2015).
The board posts such amounts required for this distinction on its website no later than the December 15th preceding the fiscal year for which such amounts shall be effective. It is important to note that the board defines a fiscal year beginning July 1st and ending June 30th. The licensee itself can set forth its own business year used for internal accounting purposes. The amounts of annual gross revenue used in these definitions fluctuate annually in an amount corresponding to the change in the Consumer Price Index published by the United States Department of Labor for the preceding year. The amount to differentiate between licensees for the 2015-2016 fiscal year is $6,382,000 (Regulation 6.010(5)(a)).
Also by these systems the company reduced its business cost and maintains the information and the data very updated form.
XBRL, the eXtensible Business Reporting Language, is an open standards-based reporting system built to accommodate the electronic preparation and exchange of business reports around the world. XBRL started back in 1999 with 12 organizations as the founding members. There are now in excess of 450 organizations worldwide in over 30 countries involved in its development. It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data. The idea behind XBRL, eXtensible Business Reporting Language, is simple. Instead of treating financial information as a
This is because XBRL enables companies to save time on having to re-key information. The system works by an item having a certain XBRL tag that it can be identified by. This information can then be “read directly by numerous other applications, and consequently will not have to be re-keyed into that application, eliminating potential errors and reducing the time that would have otherwise been needed to extract the information from financial statements that are filed before transferring to another application for analysis.” (Today, 2008). XBRL will now increase the efficiency of accountants and auditors who are required to complete comparisons to different industry averages, as XBRL will complete this automatically. Not only that, but information “can be stored and produced in a manner, such that analytical reviews and analysis can be performed much more easily.” (Today, 2008). The implementation of XBRL for companies will save both time and money, both of which are crucial in the success of a company and business.
One of the most popular developments of the widespread use of information technology is the use of the internet in many different aspects of life. Consequently, it is not surprising to find that most companies begin to benefit from the widespread use of the internet in conveying useful information to their stakeholders within the suitable time to increase the value of the information. According to Jones and Stanwick (2001) investors realise that the value of financial information declines with time, which has the effect of shortening the reporting cycle from annual or quarterly intervals to what is effectively real-time reporting. Therefore, the internet may serve as an important tool to facilitate a better functioning of financial markets by enhancing companies’ ability to provide investors with up-to-date, timely information (Abdelsalam and Street, 2007). Many changes have happened in the Egyptian environment in the last few years. Among them are: the moving toward extensive economic reforms by adopting the privatisation policy of its public sector companies, issuing a package of laws and regulations required for more stability in the Egyptian economy; such as Capital Market Law No.95 of 1992 that was issued by the Capital Market Authority (CMA) and the beginning of applying corporate governance rules to most listed corporations. These changes