Accounting is a profession that is constantly being updated and revised by the Federal and State governments. These changes are important to note, especially when new laws are established regarding taxation. My firm currently subscribes to a database known as Financial Accounting Standards Codification (FASC), funded by the Financial Accounting Standards Board. This database allows my firm to be kept up to date on revisions that may or may not effect our clients. The database allows searching and browsing specific topics, cross references to relevant information, archives depicting previous versions, a What's New tab to discuss the most recent changes, and well as an option to create your own annotations and notes [1].
While the FASC is used to develop standards within the field of accounting that works closely with GAAP (Generally Accepted Accounting Principles), it is known as "the authority on financial accounting" [2]. Currently, the FASC has authority in financial statements, enforcing accounting standards, and recommendations in approaching unique situations. The FASC is extremely successful in identifying errors in financial statements and overall business practices, that accounting firms have reported less instances of fraud or errors in communication with stockholders and government institutions. Having a standardized code for accounting practices has helped many firms in conducting correct and ethical business.
My firm has needed this databases on many occasions. Most recently was the decision by the New York Court that the Metropolitan Commuter Transportation Mobility Tax (MCTMT) was passed unconstitutionally. The tax was approved without the majority of state interest and was therefore called into question by the New York Department of Taxation and Finance. [3]. This scandal was brought to attention by my firm through news headlines regarding the situation, but this situation was previously undocumented by existing taxation guidelines. Will the MCTMT continue to take effect? Will taxpayers be penalized for not filing though it was deemed unconstitutional? Within a week, the FASC had updated the system with guidelines on the recommended course of action for tax professionals. FASC advised that those who have always paid the tax should continue to do so until the courts officially decides on the legality of the tax.
Answers to Questions:
1. What specific challenges does your database system implementation have?
One of the main challenges from using the FASC is the controversy that can be created from developing a 'standard' in accepted accounting principles. Businesses are often as unique as individuals, with differing opinions and ideas about ethical business and correct conduct. Therefore, it is always impossible to please everyone, but by creating a 'standard' principle, it can be easier for firms and government institutions to communicate and agree on certain points of interest.
2. In what ways does it provide competitive advantage for the organization using it?
A business that uses FASC is always going to have the competitive advantage over one that does not. The FASC provides current standards on accounting principles and conduct and will therefore be in possession of more knowledge. This will lead to less problems with the government over incorrect forms. For example, if the government decides that the Federal return must be mailed to Washington D.C. after a new date, accounting firms will need to be aware of this knowledge, or they run the risk of filing late returns, making for very unhappy clients. A firm that is not up to date on this information will fall behind and lose clients.
3. What improvements would you suggest?
The only improvement I can think of is to have major organizations, such state governments, recommend the use of the FASC. If the database is suggested by a government agency that is generally trusted, more businesses will be likely to use it in order to continue good business practices.
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