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New accounting standard led to confusing reports, PwC finds

An analysis from auditing firm PricewaterhouseCoopers found some interesting t

International auditing firm PricewaterhouseCoopers has discovered some strange information tucked away in the first quarter financial reports of companies that recently adopted new fair value accounting standards, according to Compliance Week.

PwC didn't notice any substantial changes in the ways companies measured fair value during its analysis of 37 organizations across a variety of industries, the source reported. It did, however, notice something interesting when it looked at their financial reports.

“For many large companies, there was a significant effort involved in gathering information to complete the new disclosures,” PwC wrote in its report. “As a result, initial disclosures were likely focused on substantial compliance, rather than readability.

The new financial disclosure in question is part of Accounting Standards Update 2011-04, which took effect Dec 15 of last year. It modifies U.S. Generally Accepted Accounting Principles to more closely align with International Financial Reporting Standards regarding fair value measurement, according to the source.

PwC noted that preparers appeared to be including information from third-party pricing services, despite the Securities and Exchange Commission and Public Company Accounting Oversight Board requiring information from in-house pricing services, Compliance Week reported.

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