Research of Emerging Accounting Issues

.....mission of the Emerging Issues Task Force (EITF) exerts upon the Financial Accounting Standards Board (FASB) The Emerging Issues Task Force (EITF) was established with the main purpose of addressing and coming up with resolve for current issues being faced by professionals in the accounting field, which were not addressed by announcements of the Financial Accounting Standards Board (FASB). Prior to the establishment of ETIF in 1984, the FASB constantly faced challenges of not being able to offer well-timed and sensible solutions to developing practice problems.

The EITF was therefore designed to disseminate and propagate carrying out guidance within the structure of the Accounting Standards Codification to decrease multiplicity when it comes down to it on a well-timed basis. In their field of profession, accountants experience a wide range of issues that are not comprehensively addressed in accounting pronouncements, and, which necessitate prompt resolve. In addition, such professionals insist that incessantly increasing body of professional statements has generated an issue of an overwork of standards.

The most significant impact that the mission of the EITF applies on the FASB is to reduce the necessity for the FASB to devote time and determination addressing constricted execution, solicitation, or other developing issues that can be investigated within prevailing Generally Accepted Accounting Principles (GAAP) (FASB, n.d). Analyze the EITF's effectiveness with finding resolutions to emerging accounting issues, and make at least two (2) recommendations as to how they could improve their effectiveness.

Justify your recommendations The EITF has to come to unanimity on a prospective solution to an issue through a voting system whereby 13 members out of the total 15 task force members have to come to an agreement prior to the publication of the solution. The Emerging Issues Task Force is quite efficacious in having swift and prompt responses to accounting issues and resolving them in comparison to the FASB.

Moreover, the task force's effectiveness can be perceived in the sense that the members respond to issues in a way that is less commanding and imposing. Nonetheless, there are areas that necessitate improvement by the EITF (Herz, 2015). One of these key areas is taking less number of meetings to come up with resolutions for emerging accounting issues that arise. In particular, it should not take the EITF an excess of three meetings to address and resolves such issues. Another area of improvement is the voting process.

The prevailing process being used is interesting and distinctive to some extent. As pointed above, reaching an ultimate consensus necessitates that no more than three members of the task force object. Despite the fact that his method was purposed to promote reaching of a consensus, offer prompt direction and to diminish diversity in practice, it can also generate some odd outcomes. This approach brings about the least objectionable accounting instead of better accounting. A recommendation would be to necessitate a majority positive voting result (Herz, 2015).

Research the issue you selected from the EITF's "Description and Status of Current Issues" page, and analyze at least two (2) key areas being addressed by the EITF There are different issues addressed by the EITF. One of the key issues is EITF Issue Number 15-F Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. One issue discussed is the distributions received from equity method investments.

The main direction offered by the task force provides an accounting policy selection for the classification of distributions received from equity method investments. These amounts can be classified using two different approaches, which include the nature of distribution approach and the cumulative earnings approach (FASB, 2016). With respect to the cumulative earnings method, from the outset, a comparison of the distributions received would be made by the investor in relation to the cumulative equity approach earnings.

The distributions received up until they satisfy the cumulative equity earnings amount, would be deemed a profit or yield on investment and therefore categorized in operating activities. Any surplus distributions received would be deemed a profit of investment and categorized in investing activities. On the other hand, there is the classification of distributions on the basis of the nature of activities undertaken by the investee that give rise to the distribution.

If the vital data and information is inaccessible in order to ascertain the nature of activities, then the cumulative earnings method ought to be employed. However, this change has to be indicated and reported on the financial books (Althoff and McKeever, 2016). A second issue is contingent consideration payments that are made subsequent to a business combination. Guidance given is that cash payments that are made three months or less subsequent to consummation date of the acquisition ought to be classified as cash outflows for investment activities.

On the other hand, any of the payments made four months afterwards ought to be classified as cash flows for financing activities. This is done up until such payments equal the initial contingent consideration liability. Lastly, the payments that surpass the initial contingent consideration liability amount are classified as cash flows for operating activities (Althoff and McKeever, 2016).

Analyze the primary manner in which a company's accounting and financial reporting is likely to be impacted by the work being done by the EITF on the chosen issue, and make at least two (2) recommendations as to the manner in which the EITF could improve a company's accounting and financial reporting The fundamental manner in which a company's accounting and financial reporting is bound to be influenced by this guidance given by EITF on Classification of Certain Cash Receipts and Cash Payments, is that it will help in the classification of issues within reporting of the cash flow statement, which is the investing, operating and financing activities.

The task force imperatively points out that accounting and financial reporting would consider soon after, to mean, three months or less from the consummation date of the acquisition (Althoff et al., 2016). One of the recommendations as to the way in which EITF would enhance a firm's accounting and financial reporting is through the decrease of diversity in practice across all industries. A second recommendation is the allowance of more flexibility in financial statements, with regard to ascertaining the classification of distributions.

Secondly, with regard to the distributions received from an equity approach investee, the EITF permit the use of the cumulative earnings method or use the look-through method to facilitate such classification (Althoff et al., 2016). Create an argument either in favor or against the EITF recommendation(s) on the issue that you have selected. Provide support for your argument I am in favor of the EITF recommendation with regard to the issue of classification of certain cash receipts and cash payments.

To begin with, the recommendation for contingent consideration payments subsequent to a business combination offers great insight, understanding and clarification as to what the term "soon after" means. Prior to this, there was substantial ambiguity. However, now it is clear that this means a period of three months or less after the consummation date of the business acquisition.

Moreover, the prevailing GAAP is unclear and lacks distinctive guidance on the classification issues and therefore the recommendations provided by the task force are an enhancement to GAAP for the reason that they provide direction and guiding principles in the two key issues and thereby decreasing not only the current, but also prospective future diversity in accounting practice (Althoff et al., 2016).

Analyze the different accounting treatments between GAAP and IFRS for the issue that you have selected, and make at least two (2) recommendations that would have a positive impact on the differences between treatments There are distinctive differences between IFRS and GAAP with respect to the classification of particular cash receipts and cash payments. With respect to U.S. GAAP, it is ASC 230 that acts as the key source of guidance for presentation of the statement of cash flows whereas for IFRS, it is IAS 7 that acts as the primary source.

One key difference in accounting treatment is the classification of components of financial and accounting transactions in the cash flow statement. Under U.S. GAAP, components of a financial and accounting transaction are classified in a collective manner based on the predominant source of the cash flows. On the other hand, with respect to IFRS, separate components of a single financial and accounting transaction are classified as financing, operating or investing. Secondly,.