Following are some of the issues in which questions have risen to the forefront in regards to “other comprehensive basis of accounting” (OCBOA).
Q: Do fair value measurement and disclosure requirements in U.S. GAAP need to be incorporated into OCBOA statements?
A: No. Financial statements prepared on a tax basis incorporate measurements into the statements paralleling measurements included in the tax returns. Cash basis statements include measurements based on cash receipts and disbursements.
Q: Do the uncertain tax positions measurement and disclosure requirements in U.S. GAAP need to be incorporated into OCBOA statements?
A: To some extent. Financial statements prepared on a tax basis or a cash basis certainly do not incorporate the uncertain tax position recognition and measurement guidance that would be used in preparing statements using U.S. GAAP.
With that said, given that uncertainties need to be disclosed in OCBOA statements in a manner similar to how they are disclosed in statements prepared using U.S. GAAP, any interest and penalties associated with income taxes do need to be disclosed in all financial statements without regard to the basis of accounting used in preparing the statements.
For some detailed practical guidance on OCBOA visit the Journal of Accountancy article:http://www.journalofaccountancy.com/Issues/2003/Oct/OcboaFinancialStatements