The answer would seem to be pretty simple, but please read on.
This author’s guidance would be to look to standards settings bodies and laws that apply to guidance for reporting of financial data that might and associated risks that may surface during an audit or areas that may have material impact on forecast results. FASB is one of many organizations that can offer such guidance relative to accounting impact.
Just who is FASB or The Financial Accounting Standards Board?
The mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.
Our financial reporting system is essential to the efficient functioning of the economy. That is because it is the means by which investors, creditors, and others receive the credible, transparent, and comparable financial information they rely on to make sound investment and credit decisions. Accounting standards are an important element of the financial reporting system because they govern the minimum required content of financial statements of U.S. public companies.
One action that FASB takes to accomplish their mission is to improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability and on the qualities of comparability and consistency.
Now give some thought as to what areas of your contracts have an impact that influences financial reporting. Here’s a clue. It is not the contract definitions area of your agreements.
We look forward to and appreciate your comments.
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