Financial Accounting Standards Board Implements New Accounting Standards
Provided by HG.org
The accounting standards managed through the private-sector organization created the Financial Accounting Standards Board or the FASB for proper financial accounting and reporting. These standards affect private and public companies as well as nonprofit organizations with the Generally Accepted Accounting Principles or GAAP.
With the implementation and advancements in technology, financial accounting needs to keep up. This requires a shift in how media, telecommunications and electronic transmissions affect the accounting field. There are new strategies and information technology applied to accounting and how companies keep books. There are new avenues to explore revenue recognition that may also include work at home and online employees and workers around the world that supply the business with revenue streams. This may change the way accounting works in the future as the authorities in the field keep pace with advancements in networking and the internet.
Recognition of Revenue
A new guideline is emerging with the FASB along with the International Accounting Standards Board or IASB. This aligns revenue recognition with the entire world. The new standard recognizes income or revenue with a company or entity through the transfer or goods or services promised to the customer or client. The amount should reflect the entitled exchange of these products or services. This becomes a judgement-based practice and throughs out the rules-based activity of the previous guidelines that accounting firms held. This may provide benefits for companies, but these rules will reflect the true exchange of goods or services for income to the business.
Changes with the Advancements in Technology
While some careers are left in the dark ages with little change or advancement, accounting needs to keep up. The alterations to financial books and violations employers incur to cheat the system demand that accounting professionals think up new ways to prevent illegal acts. There are only so many tips and advice on how to hide accounts or funding. With an accountant or legal professional that has a background in the subject, these violations are less well hidden. However, shifting from rule-based to judgement-based practices is difficult when many of these professionals study hard with one way and just adjust years or months later.
The judgement-based changes in standards affect the complex matters that often confuse those without a professional background in accounting. Some of the guidelines before the change require some parameters of rules to lead to difficulty in placing fair value on elements not delivered. The changes accountant professionals are facing could represent a significant challenge. However, with the slow implementation and gradual shift as well as additional training and classes, these experts may help the business better. It is important to review the modifications to these rules before the deadlines approach. The initial start of the shift began in 2014, but most companies have until 2018 to implement the new way to keep financial books.
The Mission of the FASB
The primary goal that the FASB has is to ensure that accounting standards and guidelines are useful and may provide investors and other individual users of financial reports the best understanding of these methods. It is important to educate stakeholders in these companies and implement standards across the nation. Comprehensive and inclusive guidelines for these goals are in place through the new processes. Another goal is to clear confusion with accounting processes and how the general rules affect the company. By keeping up with technology and implementing rules that make more sense to the business, it is possible to provide services better fit for everyone.
Supporting Boards and trustees is important. Other goals may become clear over time. However, the main focus is to shift away from rigid rules that no longer apply to product and service allocation through interactions and business sales. It is also crucial to provide oversight and promote effective standards for businesses and clients. The FASB include board members that are independent from a company and may use discretion when setting up these guidelines. Working together for the betterment of commercial success, it is possible to educate and promote accounting practices.
Legal Support in Accounting Standard Changes
There is enough time for the standards to shift over the course of four or more years. However, to ensure that violations do not affect a business with the accounting changes, it is important to hire a lawyer. Business legal representation may protect the interests of the company and help avoid legal offenses that could cost the company greatly when law are broken in these matters.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.