by Joe Ramey, ATS Manager
The SEC recently released a work plan for how International Financial Reporting Standards (IFRS) might be worked into the U.S. financial reporting system, stressing that the SEC has not yet committed to convergence of U.S. GAAP with IFRS.
The plan drew a picture of how dramatically Financial Accounting Standards Board’s (FASB) role may change in standard setting.
The plan details how an endorsement framework for incorporating IFRS into the reporting system might work and explains how other countries have had success with a blend between complete IFRS convergence and just endorsing the standards.
With this blended approach the International Accounting Standards Board (IASB) can say the U.S. is going to incorporate IFRS into their financial reporting and the U.S. can move forward globally while maintaining control of standards setting.
The most significant change for FASB would that of participating in the process for developing IFRS, rather than serving as the principal body responsible for developing new accounting standards.
Although privately-held companies are not governed by the SEC, the majority of the standards that govern private companies come from SEC standards.
Taken from the Ohio Society of CPA’s news website http://www.ohioscpa.com/PublicArticle.aspx?ID=3621
FBAR, otherwise known as Foreign Bank Account Reporting Form TD 90.22-1, is a separate filing from the U.S. Income tax return. Its purpose is to inform the federal government of the existence of foreign financial accounts in which you have an interest. Why do they want to know about this? To protect against international terrorism, combat money laundering and other crimes and to identify illicit funds or income escaping federal income tax because the money is being hidden outside the US!
Who is required to file?
Every U.S. person who has a financial interest in or signing authority over a foreign account (including bank, securities or other financial accounts) is required to file Form TD 90-22.1. This form must be received by June 30th, not just postmarked, if the aggregate value of the foreign accounts exceeds $10,000 (U.S. dollars) at ANY time during the calendar year.
While the requirements for filing this form were expanded two years ago, they had not been clarified. Final rules have now been issued explaining the reporting requirements for disclosure of foreign accounts. These new rules apply to the 2010 calendar year form that is required to be filed and received by June 30, 2011.
What types of accounts are subject to reporting?
The accounts subject to reporting include the following: foreign bank accounts (checking, savings, money market, certificate of deposits); foreign securities accounts (stocks, bonds, other securities); and other foreign financial accounts (financial agency account, insurance policy with cash value or annuity, foreign commodity exchange or association account, mutual fund or similar pooled fund available to the general public).
An account is not a reportable foreign account if it is maintained with a financial institution in the United States. For example, if a U.S. taxpayer purchases securities in a foreign company through an account with a broker located in the United States as part of their investment portfolio, it is not a reportable account. So the mere fact that an account may contain holdings or foreign assets of foreign entities does not subject the account to FBAR.
What does Signature or Other Authority Mean?
Signature or Other Authority means that an individual has the authority, either alone or in conjunction with another, to control the disposition of money, funds or other assets held in a financial account by direct communication (whether in writing or otherwise) with the custodian(s) of the financial account. The test to determine whether the an individual has signature or other authority over an account is whether or not the foreign financial institution will act upon a direct communication from that individual to effect the disposition of assets in that account. This includes situations where the foreign financial institution requires direct communication from more than one individual.
An exception applies where the officers and or employees of a U.S. Entity have authority over, but no financial interest in the reportable account. The entity is still obligated to report their financial interest on the Form TD 90-22.1. The individual officer or employee would check the box on Schedule B of their individual return indicating their authority over the foreign account, but they would be exempt from filing the FBAR form.
As mentioned above, the FBAR form is a tool to help the U.S. government identify persons who may be using foreign financial accounts to circumvent U.S. Law and to identify or trace funds used for illicit purposes, as well as to identify unreported income maintained or generated abroad. The IRS is strictly enforcing the FBAR rules and account holders that fail to comply may be subject to civil and/or criminal penalties. These penalties may include up to 50% of the account balance or imprisonment. Therefore, this is a requirement not to be taken lightly. The requirements for filing can be complex, even more so, when trusts, pensions or foreign entities are involved. Please contact us if there are any questions about filing requirements.