About 'equity research report'|...newsletter, called Stansberry's Investment Advisory, and I will immediately give you access to: Research Report #1: Cornering the World's Next Trillion Dollar Business: LNG Shipping, LNG...
In the United States, generally accepted accounting principles developed by the Financial Accounting Standards Board (FASB), a private and nonprofit organization. The organization was established in 1972, replacing the Accounting Principles Board and Committee on Accounting Procedure of the American Institute of Certified Public Accountants. FASB's mission is "to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information." The Financial Accounting Foundation, consist of eleven members, which are nominated by eight organizations (Included are American Accounting Association, American Institute of Certified Public Accountants, and Securities Industry Association.) and approved by the Trustees. This foundation oversight the FASB by selecting members of its organization and GASB (Government Accounting Standard Board for local and state governments in the United States), and funds both organizations. The Securities and Exchange Commission, (Federally protects investors, maintain fair orderly efficient markets, facilitate capital information, enforces regulations, imposes penalties against offenders, and requires public companies submit quarterly and annual reports as well as periodic reports. Those considering to invest in public traded companies and financial advisors, depend on the reliability and accuracy of these financial reports) designates the FASB, responsible for setting accounting standards for public companies. In accordance to the Sarbances Oxley Act of 2002, the SEC is responsible to pursue criminal penalties for noncompliance of wide range of established new and previous accounting standards for all US Public company Boards. In 2005, The Securities and Exchange Commission disclosed through their findings, pensions and retiree medical expenses among the biggest off balance sheet liabilities for many companies. This information had not been previously fully disclosed in corporate financial statements or listed only as footnotes, which investors and employees did not understand or under estimated the potential for future financial problems or liability. The Financial Accounting Standard Board began to work on rules for the companies to properly disclose this information in their financial reporting. This will force many companies to disclose the future costs of retirement benefits on their balance sheets. According to analyst Howard Silverblatt at Standard & Poor's (The world's foremost provider of independent credit ratings, indices, risk evaluation, and investment research data.) in New York, the new accounting rules by FASB, will increase balance sheet liabilities of the largest companies by $466 billion, (examined 532 companies) reducing their net worth by seven percent. Julie Coronado, senior economist at Barclays Capital in New York, estimates among the largest 1,000 US companies, the FASB rule will cut 30 percent of the combined net worth of manufacturers. Overall potentially wiping out billions of dollars of corporations net worth, possible jeopardizing lending agreements based upon net worth, potentially lowering credit ratings, which increases the cost for borrowing, and may affect the payment of any dividends. However, over-funded pension funds will become an asset to a balance sheet. Companies that are mostly financially impacted, include automakers, such as General Motors. General Motors Corporation said: "In its 2005 annual report that putting the cost of future pension and medical benefits on the balance sheet will make it's liabilities greater than its assets, erasing the company's net worth." Companies least affected are chipmakers, biotechs, and other new -economy businesses that typically don't offer defined benefit pensions. The new standard for accounting for reporting pension funds (liabilities or over-funded pensions) or "statement of Financial Accounting Standards No. 158, Employer's Accounting for Defined Benefit Pension and Other Postretirement Plans," are required to be including in financial reports of entities with publicly trade equity securities, by the fiscal year ending after December 15, 2006. Also, information includes recognizing changes in the funded status of defined benefit postretirement plan in the year, which the changes occur. Those changes will be reported in comprehensive income statement of a business entity and in changes in net assets of a not-for-profit organization. However, FASB is offering concessions to private companies to comply too the new accounting regulation by June 2007. Future accounting for pension liability may cause some companies to use accounting tricks (For example: Lowering the estimate of wage growth based affecting salary and pension benefits.) or lower the rate of compensation increase to reduce their benefit obligations. Also, capping amount a company is willing to pay out for such things as health care or shifting that financial burden onto their workers. Investors and employees should carefully read corporate financial statements. |
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