Businesses should be aware of changes the Financial Accounting Standards Board ("FASB") has made to certain accounting pronouncements that may have an effect on your financial statements.  For years ended after December 15, 2009, all non public entities preparing financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP) must adopt the accounting pronouncement FASB ASC 740-10 Accounting for Uncertainty in Income Taxes (the Pronouncement).

The Pronouncement, originally referred to as FIN-48, was issued in 2006 and has been in effect for public entities since that time.  Its enactment for all non public entities, including nonprofits, was delayed to provide guidance for pass-through entities (S-Corps, Partnerships, LLC's, etc.) and not for profit organizations.   The Pronouncement applies to all GAAP based financial statements, other than personal financial statements, whether audited, reviewed or compiled.

The Pronouncement requires the entity to review and analyze all "tax positions" taken by an entity and assess the potential for recording a liability for positions where it is "uncertain that the tax position will be allowed."   We do not anticipate there will be a need to record any additional tax liability however you will see additional footnote disclosures. 

On the surface, this may not seem like it has much consequence to non public companies.  However, the requirement to analyze tax positions affects many items that go into the preparation of tax returns.  We will be required to perform additional analysis and we may request information that we have not requested in the past, including:

· For all entities, we may have to more closely examine and perform additional analysis for a number of income tax related accounts.

· Additional inquires may be made related to State income taxes and the locations in which the Company is conducting business.

· If we were not the preparer, we will request copies of income tax returns for all open years (typically three years).

· For S-corporations, we will request a copy of the original S-Corp election (IRS Form 2553).

As your accountants, our goal is to assist you in complying with the Pronouncement while minimizing the impact from the standpoint of additional demands on you and your staff, as well as additional accounting fees.