FASB Wants To Improve Income Tax Disclosures

In July, the FASB issued an exposure draft of proposed changes to the income tax disclosures contained in annual reports. The comment period passed last week, but it’s worth noting what they’re trying to accomplish.

The project grew out of their disclosure framework efforts of the last few years. Most of the time, the work was aimed at cleaning out unnecessary disclosures – but as they wound down that path, the Board often found that incremental disclosures were just as necessary for investors’ use. The income tax disclosure project falls into that “incremental disclosures needed” category.

Positives: more disclosures about cash taxes paid, more discussion around indefinitely reinvested earnings. Negatives: more discretion allowed to preparers about what constitutes “significance” when making disclosures.

I’ve put together a (late) comment letter on the exposure draft, which is accessible here. Though the comment period has passed, there will likely be other chances to opine on the matter. A disclosure project on something as sensitive as income tax disclosures is not likely to whiz through FASB’s due process machinery without one more iteration.


Comments are closed.

Powered by WordPress. Designed by WooThemes