U.S. and international accounting rule makers are planning to propose an overhaul of lease accounting which is expected to affect $1.2 trillion in leased assets.

Accounting rules have normally given companies a lot of flexibility in how they record leases for assets. As a result, only certain types of leases appear on the balance sheet while a majority of a company’s leases can be kept off the balance sheet and partially hidden from an investors’ view. The Financial Accounting Standards Board will aim to change all of this by proposing to bring many of these assets, and related liabilities, onto corporate balance sheets. While some investors may welcome the change to lease accounting because it will provide more clarity, many companies are fearful that the change will force their balance sheets to balloon overnight, and change all sorts of leverage and debt ratios, forcing them to renegotiate covenants with their lenders.

To read more on these pending changes click here. To learn how these rules could impact you or your organization, contact REDWs or

According to participants in the 2010 Report to the Nations on Occupational Fraud and Abuse, a typical organization loses five percent of its annual revenue to fraud. The report, which was prepared by the Association of Certified Fraud examiners, examined a wide variety of business-related fraud in an effort to identify problems and highlight solutions.

It's not just million-dollar financial statement frauds that are of concern; the report shows that the majority of fraud cases were "less complex asset misappropriation cases involving billing, check tampering, payroll and expense report schemes."

Joseph T. Wells, CPA, CFE, has made the study of frauds and their fallout his life’s work. Wells discussed the 2010 report with the Journal of Accountancy and talks about how CPAs can apply their findings. He comments that the most surprising finding in this year’s report is discovering the overall consistency of their data from one year to the next.

For assistance in identifying potential fraud issues within your organization, please contact or .

The American Institute of CPAs, the Financial Accounting Foundation (FASB’s parent organization), and the National Association of State Boards of Accountancy have assembled an expert group to suggest ways to standardize accounting for private companies, the Journal of Accountancy reports.

At the first meeting of the group, held earlier this month, a consensus emerged among the cross-section of industry professionals that Generally Accepted Accounting Principles (GAAP) is a "gold standard" for such work. At the same time, standardization presents a challenge. As one participant noted: "We know we need to speak different languages for private vs. public companies, but one person’s flexibility is another person’s chaos. We’d prefer field hockey to lacrosse as a standard. Field hockey has boundaries.”

Attendees also noted the importance of personal integrity in the process. In the absence of uniform reporting, lenders and investors hold the individuals involved to higher standards, demanding personal guarantees. An archived recording of the discussion meeting is available here.

Worthy of note are complications from other trends in financial reporting. As WebCPA reports:

One major factor the panel must consider is the recent issuance of IFRS [International Financial Reporting Standards] for SMEs [small and medium enterprises] by the International Accounting Standards Board. The standard, which public companies in the U.S. have the option of adopting, may provide the information that most users of financial reports need.
Participants noted that companies not using standardized reporting could face challenges if they ever decided to shift to public ownership.

REDW offers deep expertise in private company financial reporting. Please contact , or .

Two new Financial Accounting Standards Board (FASB) proposed Accounting Standards Updates signal possible changes ahead for healthcare organizations. As the Journal of Accountancy reports, the first of the proposed Accounting Standards Updates would require that the measurement of charity care for disclosure purposes by healthcare providers be based on the direct and indirect costs of providing the charity care.

The second proposed Accounting Standards Update would clarify that a healthcare entity should not net insurance recoveries against a related claim liability. The amount of the claim liability would be determined without consideration of insurance recoveries.

Both of these proposed Accounting Standards Updates would represent a change from current industry practice. The deadline for comments to FASB is May 17, 2010.

With changes happening all the time, it can be difficult to keep pace. If you have questions about these or other issues within your healthcare organization, please call or from our Healthcare Services team.

The change to International Financial Reporting Standards (IFRS) has weighed on many minds in recent months (and we've written about it several times – here, e.g.). Part of the concern regarded a fast time frame for implementation. Now, we may all be able to breathe a sigh of relief thanks to a one-year extension of the Securities and Exchange Commission's projected timeline.

As CFO.com reports, the deadline had been 2014 but will now be 2015.

According to the Journal of Accountancy, "While SEC Chairman Mary Schapiro stressed that the SEC is 'on track to make a recommendation in 2011,' commissioners said that requiring U.S. public companies to report in IFRS is a highly significant decision that they would not make unless they are certain it is the best move for investors and the companies involved. "

The Journal of Accountancy has a nice page of resources on IFRS issues, and REDW of course provides a great place to turn with questions about changes in reporting. Please contact us today.