ASC 740 (formerly known as "Statement 109: Accounting for Income Taxes" or "FAS 109") is a set of financial accounting and reporting standards for the effects of income taxes that result from a company’s activities during the current and preceding years. Its primary objective is to recognize the amount of taxes payable or refundable for the current year and the deferred tax assets and liabilities relating to the future tax consequences of events that have been recognized in a company’s financial statements or tax returns.
Tax provisions have changed the way companies account for income taxes. It is now a much more complicated and labor-intensive process and one that can have a significant impact on a company’s balance sheet and income statement. The tax provision analysis for independent auditor review can be an overwhelming task — the tax accruals, tax provisions and related computations can be extremely complex, the disclosures onerous and the need for personnel with strong technical skills in tax and financial areas can be quite significant.
As a result, many companies find themselves overwhelmed by tax provisions and have turned to MFA for help. Our strong technical knowledge, experience and depth of understanding of tax provisions from both a tax and accounting perspective, has allowed us to deliver insightful advice and practical solutions to both public and privately held companies struggling with the burden of tax provision compliance on a quarterly and annual basis. We draw on the knowledge and experience of our specialty tax teams to proactively consider strategies that clients may utilize to optimize their tax provisions.
Because we are experienced, we are well prepared to aid in the preparation and/or review of tax provisions. We have extensive experience working with our clients’ auditors, cultivating a high level of trust in the accuracy and reliability of our tax provision work. We emphasize open communication between MFA and our clients’ auditors, as we believe this is critical to ensuring that their tax provision documentation meets the needs of their auditors.
To learn more, download our Technical Accounting Advisory Services brochure.