Fin 48 Reminder

Fin 48, Uncertainty in Income Taxes, is effective for nonpublic and nonprofit entities for the first time for calendar year 2009. Determination of tax positions which may require a provision for unsustainable portions of more-likely-than-not tax return deductions, as well as penalties and interest for failure to file required tax returns for all open tax years in all applicable jurisdictions, must be made by all entities preparing financial statements on a GAAP basis. According to a recent amendment, Fin 48-3, pass-through entities and non-profit organizations must also be considered.

Both the AICPA and PPC have guides with checklists available to assist in applying Fin 48. Some practitioners are considering the use of an OCBOA to avoid application of this pronouncement. Others are determining the materiality of not applying the pronouncement in GAAP financial statements and either disclosing immaterial effects or discussing a possible departure from GAAP report paragraph with the client and the user of its financial statements.

In any event, consideration of this pronouncement should not be left until the last minute. In some cases, it may require extensive work for the client or the auditor which could delay report issuance. You can download the original pronouncement and its updates from www.fasb.org or find them in FASB's Accounting Standards Codification, Topic 740. Post a comment and tell us about your experiences in applying this pronouncement.