IASB cracking down on window dressing
by AccountingWEB on
The International Accounting Standards Board (IASB), the global body whose rules are used in more than 100 countries, has strengthened regulations requiring banks to disclose window dressing transactions.
"These are important disclosure requirements that will help investors to better understand off-balance sheet risks, and to alert them to the possibility of so-called window dressing transactions occurring at the end of a reporting period," IASB Chairman Sir David Tweedie said in a statement.
Window dressing refers to the deceptive practice of using accounting tricks to make a company's balance sheet and income statement appear better than they really are. Window dressing came to the forefront when it was revealed that Lehman Brothers had shifted approximately $49 billion off its rolls at the end of each quarter to lessen financial leverage ratios, according to UK-based Financial Times.
The trades were designed to bolster the reported accounts and had no economic justification, according to the Financial Times, which added that the bank used short-term repurchase, or repo, deals.
"Investors were shocked when toxic securitized assets they knew little about were brought back onto bank balance sheets as the financial crisis unfolded, triggering huge write-downs and taxpayer bailouts," according to Huw Jones of Reuters.
The IASB and the U.S. Financial Accounting Standards Board (FASB) will conduct additional research and analysis, including a post-implementation review of the FASB's recently amended requirements before determining any further work to be undertaken.
The Financial Times reported that the IASB did not specify a format for banks to produce the disclosures, but it did require them to be in one location and not in multiple locations throughout the accounts.
You may like these other stories...
The Public Company Accounting Oversight Board (PCAOB) is interested in what you have to say about auditing accounting estimates and fair value measurements.The US audit regulator on Tuesday issued for public comment a staff...
Hertz withdraws full-year forecast, cites accounting review, challengesRental car company Hertz Global Holdings Inc. said on Tuesday it is withdrawing its full-year financial forecast and expects 2014 results to be “...
Treasury prepares options to address tax inversionsDamian Paletta of the Wall Street Journal reported on Monday that US Treasury Department officials are assembling a list of administrative options for Treasury Secretary...
Upcoming CPE Webinars
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.