The move to International Financial Reporting Standards (IFRS) will necessitate significant changes in how financial professionals approach their work, according to renowned panelists at a recent industry forum.

One panelist compared Financial Accounting Standards Board Statement No. 133 – an 800-page guide on "Accounting for Derivate Instruments and Hedging Activities" – and the U.S. Constitution as examples of rules-based vs. principles-based approaches. IFRS represents a more principles-based approach to reporting.

Though IFRS could reduce the number of rules financial professionals must be familiar with, the new standards will also create a greater responsibility and require new ways of analyzing choices, the panelists noted.

The shift could place a greater emphasis on experience in the industry. To learn more about what these changes could mean to your company or organization, please call our experienced Audit Services team today.

WebCPA reports that the Financial Accounting Standards Board and the International Accounting Standards Board have agreed in broad terms on the definition of "fair value." Fair value will likely be defined as exit price and will be generally considered to be market-based according to reasonable pricing assumptions. The boards defined conditions under which an initial valuation might no longer hold and laid out scenarios under which markets might be considered "orderly." The full set of tentative decisions can be read here.

Fair Value is one of the biggest concerns the boards face as they race to "converge," or integrate, U.S. GAAP with International Financial Reporting Standards (IFRS) by June 2011.

Valuation of assets has always been a complex endeavor, but with the rapidly changing regulatory environment, we suggest being in regular contact with your financial professionals. If you have any questions about assets you're carrying or planning to acquire, please contact us today.

When the Financial Accounting Standards Board (FASB) met on January 27, 2010, they made some decisions affecting issues related to segment disclosures:

At its meeting today, the Board decided that an entity would also be required to disclose for each reportable segment:

1. A measure of operating cash flow. An entity would also be required to reconcile the sum of operating cash flows of its reportable segments to operating cash flow as reported in the statement of cash flows.

2. A measure of liabilities if that amount is reported to the chief operating decision maker.

3. A measure of operating assets and a measure of operating liabilities.

We would encourage you to review the entire summary of the most recent FASB decisions, and please contact REDW's audit and consulting team for help in evaluating what this means for your business.

An annual self-evaluation is an important best practice for every audit committee. Like all self-evaluations, it enables the audit committee to understand its strengths and determine areas for improvement. A recent AICPA Audit Committee Brief provided an excellent primer for what components to include in constructing your self-evaluation and some important questions to ask. A sampling of the questions you should be asking include:

• Does the audit committee have a positive working relationship with management, internal auditors and independent auditors?

• Does the committee provide to the chair its own view on issues?

• Are differences of opinion resolved to the committee’s satisfaction?

• Do all members provide appropriate input to the committee chair?

• Is an audit committee charter used to guide the committee’s efforts and agenda?

• Does the committee engage outside experts, as appropriate?

If you feel you need help in crafting your annual self-evaluation or addressing some of the areas for improvement it raises, please contact REDW's audit and consulting team.

The need for internal controls for businesses are given a lot of attention, and we have provided recent examples of just why they are so important. Of course, businesses are not the only ones who need internal controls. Governments, especially in this time of increased spending and pressure to rapidly distribute funds, must have strong internal controls in place. A recent situation in West Virginia illustrates this point:

In the spring of 2009, an intriguing example of fraud brought this question to the forefront. Fraudsters were able to set up bank accounts in the name of legitimate vendors to states. Before they were arrested, the fraudsters had defrauded West Virginia of $2 million and attempted thefts in a number of other states as well. These fraudsters didn’t bother stealing from individuals – they went right to corporate America because they realized individuals are small fry.

The key to the fraud’s success: West Virginia thought it was paying a legitimate vendor. The state had received paperwork asking for deposits in legitimate new accounts, and all the documents required to make changes to the vendor’s account had been provided to accounts payable personnel. However, those seemingly legitimate accounts were in fact mechanisms to illicitly sweep funds overseas. In addition to the state of West Virginia, a number of well-known consulting firms fell victim to the scheme.

Government entities and businesses interested in evaluating the adequacy of their internal controls to mitigate occurrences of fraud should contact REDW's audit and consulting team.