Highlighted herein is a summary of Michael Cohn’s article “ IASB Plans Cooling-Down Period for New Standards” in Accounting Today, March 8, 2012. The paper summarizes the key points of the article and points out why the article is relevant to Fairly Large Corporation.
The article is basically about the need for a period of relative stability for the accountants to adjust to the new accounting standards as reached upon by the International Accounting Standards Board and the Financial Accounting Standards Board. The article also highlights the benefits of adjusting to these standards. In his speech, IASB chairman Hans Hoogervorst reveals that the board spent five years improving the IFRSs, and another five years converging its work with the FASB. The adjustment to these new standards needs a period of relative stability. Investors need to be familiar with the new standards, Auditors need to learn how to audit based on the standards, and regulators need to learn how to enforce the standards.
The most important areas that require change is also highlighted by Hoogervorst. They include completion of the revisions to the board’s conceptual framework, especially in measurement; and the disclosures. The framework is the key reference point in decision making and enables IASB to make consistent decisions across the standards. It also acts as a reference for companies. Disclosure overload is one key challenge especially with the increasing complexities in the businesses. Such complexities must therefore be described by financial reporting. The disclosure requirements must be appropriate to improve clarity of the financial reporting. Other Comprehensive Income is another priority due to its increasing use as a home for income of less certain nature. Health warning needs to be included in the income reported in OCI, and a clear conceptual definition of OCI used to solve the thorny issue of recycling and the volatility and financial reporting.
The issues highlighted herein are of great importance to Fairly Large Corporation. The company needs a relative stability period for the adjustments to the new accounting standards. The conceptual framework would act as a reference to the company. Besides, the company would be able to handle the disclosure overload through describing the complexities in the financial reporting. This would improve the clarity of the reporting.
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Cohn, M. “ IASB Plans Cooling-Down Period for New Standards” Accounting Today. March 8, 2012. Web. 20 Mar. 2012.