Recent changes to accounting rules affect realization of income for public corporations to take effect December 15 of this year. The new accounting standard will have an impact on the details companies must capture affecting everything from corporate financials to domestic and international tax accounting. The new rules replace virtually all of the existing rules regarding the way a company will recognize revenues under International Financial Reporting Standards and here in the United States’ Generally Accepted Accounting Principles (GAAP).
Companies will be required to provide much more detailed information regarding everything from accounting judgments to how contract revenues are received and reported. These changes will require substantial changes to internal accounting systems, and perhaps even the contracts themselves. The balance sheet on many corporate financials may reflect a one-time increase or decrease based upon retained earnings. The impact of these accounting changes will also impact forecasts.
While this rule change doesn’t presently apply to privately held companies and smaller corporations and LLC’s it is the first step as the US Government and the Internal Revenue Service require more transparent reporting of internal financials. It is only a matter of time before these rules affect all US corporate entities.
Allen Barron is well positioned to guide your company through the present and future turbulent waters of business and accounting. The good news for many business owners and executives is the extent to which the additional information will inform critical decision making. “Most American businesses undervalue accounting,” says Janathan Allen, of Allen Barron. “Accounting systems should capture granular details which inform real-time decision making throughout any organization.”
Well conceived accounting systems should feed internal dashboards for managers and executives company wide. “Any executive or manager would have more accurate, timely and valuable information to make critical business decisions,” Ms. Allen continued.
Allen Barron provides integrated tax, accounting, legal and business advisory services for small and mid-sized businesses here in San Diego and across the Southwest United States. We guide interstate and international clients as they manage complex issues from transfer pricing to California’s Water’s Edge Election. “Our clients not only have more information to make accurate decisions and recognize changing market conditions in real time, they have the detailed data necessary to quickly defeat an IRS audit or prevent one from occurring in the first place.”
We invite you to contact Allen Barron or call 866-631-3470 for a free consultation. Learn how changes to accounting rules affect realization of income for public corporations and how an effective accounting strategy can increase the success and profitability of any business entity.
