Financial Reporting Alert

rgp_logoThe policyIQ team is a division of Resources Global Professionals. Our organization issued this alert on December 19th and we want to be sure to pass it along to our policyIQ community. If you have any questions, feel free to reach out directly to your Resources Client Service Director or you may contact us and we’ll help to connect you with your representative.

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FASB AND IASB ISSUE COMMON DISCLOSURE
REQUIREMENTS
FOR OFFSETTING ASSETS AND LIABILITIES

On December 16, 2011, The Financial Accounting Standards Board (FASB)  and the International Accounting Standards Board (IASB) issued common disclosure requirements for the offsetting of assets and liabilities on the Statement of Financial Position (FASB: ASU 2011-11;Topic 210 Balance Sheet,  IASB: Amendments to IAS 32:  Financial Instruments Presentation).

Background

The differences in offsetting requirements under US GAAP and IFRS account for significant differences in the comparability of the Statement of Financial Position (balance sheet) for certain industries.  As such, the users of financial statements requested both boards to address this issue in order to better enhance the comparability of the financial statements under both standards.

Offsetting, or netting, is the presentation of assets and liabilities as a single amount on the balance sheet.  Unlike IFRS,  US GAAP allows companies the option to present net on their balance sheets derivatives that are subject to a legally enforceable netting arrangement with the same party when rights of set-off are only available in the event of default or bankruptcy.

Main Provisions

Rather than converge on the actual requirements, the boards retained their existing offsetting models and instead issued new disclosure requirements to allow users to better compare financial statements presented in accordance with US GAAP or IFRS.

Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement.  The scope includes derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements.

Effective Date

US GAAP:  For annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods.

IFRS:  Annual periods beginning on or after January 1, 2014.

Disclosure requirements are to be applied retrospectively under both standards.

How Resources Can Help

We provide strong technical accounting, project management, internal controls and information systems expertise and can help businesses with all aspects of financial reporting, including assessing the impact of this standards update on your business.  Please contact your client service director for more information.

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ABOUT RESOURCES GLOBAL PROFESSIONALS
Resources Global Professionals is a multinational professional services firm that helps business leaders execute internal initiatives. Working as members of client teams, we solve problems, execute and transfer knowledge. Partnering with business leaders, we drive internal change across all parts of a global enterprise – finance and accounting, information management, internal audit, human capital, legal services and supply chain management.

Resources Global was founded in 1996 within a Big Four accounting firm. Today, we are a publicly traded company with over 2,700 professionals, from more than 80 practice offices, serving 2,200 clients around the world.  Headquartered in Irvine, California, Resources Global has served 81 of the Fortune 100 companies.

For additional information, please contact your Resources Global Professionals Client Service Director. www.resourcesglobal.com 1(800)900-1131.

This entry was posted in Industry News by Stephenie Buehrle. Bookmark the permalink.

About Stephenie Buehrle

Stephenie is the “solutions” expert on the policyIQ team. With RGP since 2004, she designs and develops solutions that capitalize on the best practices of the hundreds of companies that she has touched, while tailoring each configuration to meet the unique needs of each client. Before joining RGP and the policyIQ team, Stephenie enjoyed working as an independent consultant in the non-profit sector. Stephenie also previously performed analyst services for a major brewer ranging from roles in biological and chemical services to analytical roles in business process improvement and innovation. Stephenie quips that she still doesn’t know what she wants to be when she grows up, but hopes to spend her days helping others (companies, individuals, and communities) to realize their full potential.

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