Further refinements to fair value standards, a keen emphasis on
going concern and bringing many off-balance-sheet items back onto
US companies’ balance sheets are three accounting issues to look
out for in 2009, according to Fitch Ratings.

The global ratings agency said in its annual global outlook that
2009 would be a “bellwether” year for accounting and financial
reporting, particularly in relation to fair value and convergence
of US GAAP and IFRS.

Fitch Ratings credit policy group director Olu Sonola said while
it was highly unlikely that fair value accounting would be
reversed, it was increasingly clear that there would be additional
refinements to temper some unintended consequences.

Another pressing issue, the ratings agency added, is how best to
justify a going concern basis, given the doubts some banks have
about companies’ ability to refinance.

Going concern would continue to be particularly sensitive while
profitability and regulatory capital adequacy is at stake for many
financial institutions.

Fitch also expected new accounting rules on special purpose
entities to bring many off-balance-sheet entities back onto US
companies’ balance sheets.

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“Outside the US, new segment reporting under IFRS will need to
be explained well if analysts are to understand the financial
performance of a company given everything else that is happening,”
managing director Bridget Gandy said.

The good news for analysts and investors was that disclosures
are set to improve on multiple fronts, the rating agency reported.
It advocated early adoption of any improvements to fair value
disclosures produced by the International Accounting Standards
Board and US Financial Accounting Standards Board.

Analysts and investors should also be aware of some important
longer-term accounting changes that the accounting standard setters
will debate in 2009, the agency said. These include financial
statement presentation, revenue recognition, distinguishing between
liabilities and equity, lease accounting and accounting for
insurance contracts.