One of the problems with American accounting rules is just that. U.S. companies want very specific rules spelled out by the FASB (Financial Accounting Standards Board) so they can develop strategies to follow them “technically” but circumvent the “spirit” in which they were enacted. Rules by the IASB (International Accounting Standards Board) which is mostly followed by the “rest of world” corporations tend to be more broad-based.
The USA’s Sun (identity) challenges Saturn (rules and regulations), giving America a tendency to police and regulate everything. With Jupiter as the overall planet ruling the USA horoscope, lawyers and litigation play a major role.
So it is a refreshing development that the FASB and IASB are working together to create a single set of global accounting rules, which over 100 countries either follow or will adopt. Saturn in Virgo (accounting) harmonizing with Jupiter in Capricorn this year will make this process a lot easier for the two boards. Pluto, the planet of major change and transformation, will move into Saturn-ruled Capricorn this year until 2024. The structure of public companies will radically change to a global standard, which like the new accounting rules, U.S. companies will face the biggest impact.
Currently, companies book charges for M&A fees as goodwill on their balance sheet. Under the new law, fees charged by investment banks, lawyers, and accountants will have to be charged as a onetime expense, negatively impacting their net income for the quarter the expenses are charged. (The IASB estimates these fees average about 1.5% of the cost of the deal.) The deadline for companies reporting under GAAP (Generally Accepted Accounting Principles) is the end of this year. For companies using IASB rules, it’s July 2009.
USA: July 4, 1776 5:10 PM Philadelphia, Pennsylvania
Financial Times: “New M&A rules to hit profits” (p. 17 of the Companies & Markets section. I was unable to find the link for this article on http://www.ft.com/.)