All Senior Executives Need to be Aware of FIN 48
Just when you thought it was safe again, from the horrors of FASB pronouncements (remember FAS 123r and the stock option accounting nightmare) along comes FIN 48, "Accounting for Uncertainty in Income Taxes."
Los Angeles, CA (PRWEB) October 31, 2007 -- Charles Dargan, CEO of www.cfo911solutions.com offers, "While many in the accounting profession thought this was a bad idea, since it could give the IRS a roadmap to auditing certain corporate tax positions, nobody thought Congress would also use it. Surprise!"
The Senate's Permanent Subcommittee on Investigations, led by Michigan Democratic Senator Carl Levin, is using the FIN 48 disclosures to investigate companies that disclosed large tax reserves. There are some 30 companies that the Senate investigators have requested information regarding details of tax transactions, as reported in the Wall Street Journal. Where it goes from here will be interesting and probably unnerving.
Before FIN 48, none of this information was required to be disclosed in the financial statements, and most if not all corporations chose not to provide such information, for the obvious reasons. Most tax issues, and especially aggressive tax positions, were adjudicated with the IRS or in court, away from the public arena. Now, this will not be the case.
From the FASB summary, FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The first step is recognition: The enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement: A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
About CFO 911 Solutions:
CFO 911 professionals are the leading, hands-on experts in solving operating, accounting and finance problems for both public and private companies. CFO 911 professionals have amassed a unique depth and breadth of operational and finance experience developed by having worked as Presidents, COOs and CFOs inside Fortune 500 firms, micro cap publicly traded companies, private emerging growth companies and not-for-profit organizations.
Our experience includes a variety of industries: software, telecommunications, wireless services, systems integration, aerospace, defense, manufacturing, distribution, entertainment, health care, medical devices, apparel, transportation, food, computer hardware and peripherals, internet portals, E-commerce, motor sports, specialty retail, restaurants, automotive aftermarket, satellite radio and heavy construction.
To help you improve your bottom line, call our office @ (310) 574-9119, or visit our newly updated website at: www.cfo911solutions.com.
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