According to Wikipedia, the source that popularized this pictorial maxim is a 17th-century carving over a door of the famous Tōshō-gū shrine in Nikkō, Japan. The three wise monkeys symbolize the proverbial principle “see no evil, hear no evil, speak no evil”. There are many meanings associated with this proverb and it’s often used to describe someone turning a blind eye.
Apparently, 99% of companies operating in the U.S. subscribe to this proverb in the context of FASB Topic 832: Disclosures by Business Entities about Government Assistance. According to the Financial Accounting Standards Board (FASB), “the objective of this project is to develop disclosure requirements about government assistance that improves the content, quality and comparability of financial information and financial statements…”. The comment period for this Accounting Standards Update (ASU) closed on Feb. 10, 2016. Of the 39 responses, only 9 public companies and 1 private company submitted comment letters on Topic 832 – in contrast to the hundreds that submitted letters on Revenue Recognition.
The FASB is left to re-deliberate this project with minimal input – and we all know how that story ends. Are there competitive reasons for the lack of input? Are there political reasons? Do companies simply have other issues that are currently taking priority? The answer to all of these questions is probably yes. Regardless of the reasoning behind the lack of input, tax, accounting and finance professionals should be careful not to bury their collective heads in the sand on this topic. Before you know it, the FASB will have issued the pronouncement along with an effective date. And you’ll be left scrambling to wrap your head around how your company is going to deal with this issue. I’m not sure about you, but I don’t want to be caught flat-footed on this one.
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