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FAF concludes post-implementation review of Statement 109

  • Report document — dark blue Image

Nov 19, 2013

The Financial Accounting Foundation (FAF) has issued its report on the post-implementation review (PIR) on FASB Statement No. 109, “Accounting for Income Taxes.” The PIR report summarizes research results, conclusions, and provides recommendations based on its review. The overall outcome of the PIR was that Statement 109 was working as intended.

The key objectives of the PIR included:

    1. Determining if Statement 109 accomplished its stated purpose.
    2. Evaluating the implementation, continuing compliance costs, and related benefits.
    3. Providing recommendations on the standard-setting process.

To complete these objectives, the PIR team received input from a diverse set of stakeholders by conducting various outreach events, research, and surveys.

The PIR team concluded:

  • “Statement 109 adequately resolved the issues underlying its stated need, but may not have reduced the complexity associated with accounting for income taxes.”
  • "Information resulting from the application of Statement 109 provides investors with decision-useful information, although certain income tax information may not be sufficiently aligned with investor needs.”
  • “Most of Statement 109’s requirements are understandable, can be applied as intended, and enable income tax information to be reported reliably.”
  • “Statement 109 did not result in any significant changes in operating or financial reporting practices, nor did it have any significant unanticipated consequences.”
  • “The nature of the costs incurred by stakeholders to implement Statement 109 (primarily resource related) was consistent with those expected for a standard addressing a complex area of accounting.”

On the basis of these conclusions, the PIR team did not have any standard-setting process recommendations.

The next post-implementation review will be on FASB Statement No. 123(R), Share-Based Payment.

For additional information, please see (links to FAF’s Web site):

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