We need better financial reporting

Article Abstract:

Traditional financial reporting is not able to incorporate the emerging nonfinancial concerns of corporations. Because it is based purely on historical costs and focuses on reporting economic events, its usefulness to investors, creditors and consultants is limited. A more flexible approach that incorporates nonfinancial and operating information is therefore needed to make financial reporting more relevant. Changes should be made by extending the business information model, improving financial statements, enhancing auditing and making the report responsive to changes. More specifically, the Special Committee on Financial Reporting recommends the incorporation of high-level operating data and performance measures and forward-looking information and the expansion of segment reporting. These changes should result in reduced capital cost, more efficient trading, and minimized probability of litigation.

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"Fairly presented, in accordance with GAAP." What does it really mean?

Article Abstract:

The meaning of the phrase 'fairly presented, in accordance with Generally Accepted Accounting Principles (GAAP)' has never been fully clarified. Based on the interpretation of the American Institute of CPAs, as contained in its Statement on Auditing Standards No. 69, this expression means that financial statements are fairly presented because they comply with GAAP. However, there is no assurance that these reports indeed fairly present the financial information of the company that issued them. This can be clearly seen in pension accounting, health and life insurance for retirees, marketable equity securities, marketable debt securities and income taxes. To provide some clarification, the FASB should take a firm position and insist on the standards most likely to lead to fair presentation. Corporate accountants and auditors should also make sure that statements are always fair and accurate.

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An unpopular tax proposal

Article Abstract:

A proposal to implement a national sales tax is seen as the answer to taxation problems. A sales tax would: eliminate abusive tax shelters, tax consumption instead of income, allow the charitable contributions tax deduction to remain in effect, provide tax relief for low income families, encourage companies and wealthy individuals to pay their fair share of taxes, leave the tax deductions related to home ownership untouched, and encourage Americans to save money, especially for their own retirement years. Sales taxes are discussed as an alternative to income taxes.

Analysis, Tax reform, Sales tax

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