E&Y Offers Corporate Reporting Update.

• Position: Ernst & Young - Brief Article

Once again, as it has for more than 20 years, Ernst & Young is offering a Year-End Corporate Reporting Update Program aimed at providing timely information and critical insight on current financial reporting developments to FEI members. Some 35 FEI chapters hosted the accounting firm's program last year, and the Financial Accounting Standards Board, Securities and Exchange Commission and others continue to make major changes that financial executives will want to follow actively and understand.

The program covers major topics that affect companies, such as:

* Expected New Rules for 2000. In what would be a major change in future financial reporting, the FASB's proposed standard on business combinations would eliminate the use of the pooling-of-interests method and significantly change the accounting for goodwill and other intangible assets. Proposed consolidation rules, expected to be finalized before the end of 2000, would require a parent to consolidate entities that it "controls" (under the FASB's new definition) even though it owns less that 50% of the entity's voting stock. More entities will be required to be consolidated, and management must understand and get ready for these changes now. In addition, the FASB issued an Interpretation of APB 25 that significantly changes the accounting for certain stock option grants. Management needs to be aware of these changes if it wants to avoid recognizing compensation expense.

* Derivatives & Hedging. The FASB's amendment of Statement 133 will have a positive impact on the implementation efforts of many companies. However, the complexity of the FASB's new standard, even after the amendment, should not be underestimated. E&Y continues to urge companies that have not yet done so to begin their assessment of Statement 133, and claims its 2000 program will assist in these efforts.

* Other Reporting Developments. The FASB's current agenda ensures that standard-setting controversies will go on unabated. As part of its project on asset impairment, the FASB is reconsidering the EITF's conclusions on restructuring charges, including severance costs, and plans to issue an exposure draft in June 2000. The FASB issued an exposure draft on asset retirement obligations that, if adopted, would utilize new present value measurement concepts and result in a significant change in practice for many companies. In addition, the FASB's Preliminary Views on the fair value of financial instruments could lead to major...