Tax reform and income tax accounting

The FASAC discussed financial reporting issues associated with the Tax Cuts and Jobs Act. Council members “expressed mixed views” on the FASB’s research project on income taxes — backwards tracing. However, FASAC members support the FASB’s efforts to “refresh” its income taxes disclosure review project and to conduct more research on simplifying the accounting for income taxes.

Implementation of new revenue recognition standard

The FASAC discussed initial and recurring costs related to transitioning to the new revenue standard. Some council members noted that “the initial level of effort to apply the revenue recognition standard was somewhat higher than originally anticipated.” Most members expect that the recurring cost of applying the revenue standard would be “substantially lower” and could generate savings in the future. The FASAC also discussed (1) use of estimates, (2) the accounting change process, and (3) auditor independence and training.

For more information, see the meeting recap on the FASB’s Web site.