The latest changes proposed by the Financial Accounting Standards Board (FASB) would implement a new set of income tax disclosure rules that would provide more transparency to investors regarding a company's exposure to changes in tax legislation and the potential global tax risks across multiple jurisdictions.
Partner Ro Sokhi noted the changes would not be a significant burden on companies, as the information is already available from filings with the IRS. “The information should already be available to companies for their own tax compliance for their filings of their tax returns,” he said.
There is a potential area for concern regarding the breakout of the taxes in each federal, state, and foreign jurisdictions. “However, because this information would need to be included in the SEC filings on a disaggregated basis, they’ll have to evaluate the internal controls around financial reporting for the information that is being included,” Sokhi said. “That includes, where is this information coming from, what are the systems involved, are there general IT controls that management has in place, and if not, does management need to bolster these controls.”
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