US accounting board makes reporting u-turn

Just as the third quarter ended, Tim Lucas, head of the emergency task force at the US Financial Accounting Standards Board, announced the tentative decision to allow companies to write down the costs of the terrorists strikes as one-off ‘extraordinary items’ had been rejected.

A spokesperson told AccountancyAge.com it was felt that allowing ‘extraordinary items treatment was not appropriate in this case’.

The accounting regulator deemed the economic costs of the attacks as ‘too extensive and pervasive’ to capture in a one-line entry or for it to be an effective way for companies to communicate their results.

Analysts are expected to be relieved by the move which they feared would allow companies to smooth over the effects of the global economic slowdown affecting companies’ profits before 11 September.

‘The economy was already beginning to soften before the 11 September. It would be very difficult to separate the direct effects from the indirect in an appropriate way,’ added the spokesperson.

Mary Keegan, head of the Accounting Standards Board in the UK, said: ‘We were monitoring FASB to see what it would do. But it is one area where US accounting standards are quite different to ours.

‘We tightened this up in the UK some years ago. There are virtually no extraordinary items in the UK now.’

Links

FASB moves closer to UK rules

FASB website

ASB website