US set to adopt first international standard

The IASB is likely to require companies to factor the potential uncertainty of a tax position, regardless of how small this may be

Written by Penny Sukhraj

Accountancy Age, 07 Jul 2008

The US standard setters are set to adopt their first IFRS rule wholesale into US accounting, in the form of IAS 12, which deals with tax.

But the standard could leave investors uncertain as to how tax positions would be accounted for, since the US standard, FIN 48, tells companies how to account for uncertainty in tax positions, and specifically requires companies to include information about potential tax liabilities – information previously hidden with other potential liabilities.

But IFRS does not have a recognition threshold. The IASB, CFO.com reported, is likely to require companies to factor the potential uncertainty of a tax position, regardless of how small this may be, into the amount of taxes reported on the financial statement.

The way in which this liability is measured could also differ from US standards.

The Financial Accounting Standards Board is expected to announce a resolution in the next few months.

Further reading:

Make-believe world of tax