The accounting standards overseer is proposing additional reporting on tax changes and cash held abroad
The proposed update is part of the FASB's broader disclosure framework project to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to users of a reporting organization's financial statements.
FASB's proposal would modify existing disclosure requirements and provide additional disclosure requirements for income taxes. The changes include describing an enacted change in tax law, disaggregating certain income tax information between foreign and domestic, and explaining the circumstances that caused a change in assertion about the indefinite reinvestment of undistributed foreign earnings. It also will require disclosing the aggregate of cash, cash equivalents, and marketable securities held by foreign subsidiaries.
The move is likely a response to the growing concern that companies are hoarding cash overseas to avoid repatriating it and paying taxes in the United States on income earned abroad.
The proposed update differentiates disclosure requirements for public business entities as defined in the Master Glossary of the FASB Accounting Standards Codification and for organizations other than public business entities.
Income taxes is one of four areas where FASB is evaluating improvements to existing disclosure requirements. Other areas the Board is addressing include an employer's disclosure of defined benefit plans, fair value, and inventory.
FASB is asking for review and comment on the proposal by September 30, 2016.