Excellent write-up in the Wall Street Journal on the saga surrounding the tax code for multinational companies.  The article [subscription required] follows the White House assertion that companies with overseas operations are avoiding proper taxation by employing their right to defer taxes on out-of-country sales until revenues are brought back into the U.S.  As the article states:

Critics long have complained that the [deferral] provision encourages companies to avoid U.S. taxes by expanding production on foreign soil. On the campaign trail last year, President Barack Obama promised repeatedly to “end tax breaks for companies that ship jobs overseas.”

U.S. businesses counter that the deferral provision allows them to better compete globally, which in turn allows them to expand their U.S. operations, too. If the deferral were eliminated, they contend, the financial damage to their businesses would require them to cut jobs in the U.S.

According to the article, CEOs of multinationals mobilized to engage the White House in direct dialogue in order to ensure their viewpoint was heard.  The Administration has taken a step back in response and seems to be considering both sides of the argument with a clearer focus.

The issue is far from resolved, though, and just as we touched on the topic in a blog post in May, we will continue to keep you apprised of further developments.

Perhaps in response to slow adoption of International Financial Reporting Standards (IFRS) among private companies, a new “quick guide” has been issued that condenses the standards to 230 pages or less.  That stands in stark contrast to the full complement of public company guidance, which comes in at nearly ten times that length.

IFRS isn’t yet mandated for public entities but it is already available and encouraged for private companies.  According to a recent article in CFO Magazine, Private Companies Get IFRS Made Easy, the abridged version leads to simplified measures that may take a good deal of unnecessary pain away from financial statement preparers in these organizations:

Notably, various accounting-policy options in full IFRS are replaced by simpler methods. For example, several options for financial instruments — including available-for-sale, held-to-maturity, and certain fair-value options — aren’t included in the pared-down standard. Neither is the revaluation model for property, plant, and equipment and for intangible assets. For investment property, the accounting is driven by circumstances rather than choosing between the cost and fair-value methods.

The International Accounting Standards Board made another attempt to bring order to the global uncertainty around fair value.  This serves as one more step to closing the distance between GAAP and IFRS, and according to this article from Accounting Today the guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date,” or the exit price.

I noted in March that Mary Schapiro may be looking to slow the convergence process; even so, agreement on fair value continues to be a dominant point of discussion.