Accounting Implications of ACA Research Paper

Pages: 3 (1015 words)  ·  Bibliography Sources: 5  ·  File: .docx  ·  Level: College Junior  ·  Topic: Healthcare

SAMPLE EXCERPT . . .
The ACA comes with an excise tax that creates a liability for many companies, in particular ones that prefer to move their employees onto the health exchanges rather than maintain coverage. This excise tax can be reasonably estimated, and this creates the need for internal controls within companies to mitigate this liability (CalCPA, 2014).

Whitehouse (2014) also notes that when company reduce a benefit that has already been promised to their employees -- as is certainly the case with retiree health benefits, this might open those companies up to legal action. Class action suits are likely, as retirees forced to look at other alternatives may choose legal action. While the company might reasonably determine that any settlement is likely cheaper than continuing to provide this benefit, the company also has to understand that if the threat of a lawsuit is real, and can approximately be quantified, that it creates a reporting obligation under ASC 450 -- this is a foreseeable liability that must be recorded. That will have a negative impact on the profits of the company, as the liability will need to be reported before it is even realized, as a foreseeable future expense. Certainly, should one or two such lawsuits be successful, the FASB will have no choice but to clarify that such legal risks need to be reported under ASC 450.

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As the rollout of the Affordable Care Act continues, it is worth remembering that not all of the ways that it will affect accounting are going to be understood immediately. There is the risk that further issues will come to light, and the FASB will need to make other statements that address some of the key issues. Because the ACA is affecting things like health plans, retirement benefits and other complex accounting issues, some of the issues that look minor today could prove to be major tomorrow. It is necessary for the FASB to continue to examine the ACA and some of the issues that arise, so that statements can be issued to close loopholes and address new problems quickly as they arise.

References

Research Paper on Accounting Implications of ACA Assignment

CalCPA. (2014). ACA mythbuster. California CPA Education Foundation. Retrieved May 2, 2014 from http://www.calcpa.org/content/27238.aspx

FASB (2010). Contingencies (Topic 450). Financial Accounting Standards Board. Retrieved May 2, 2014 from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175823559187&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=309726&blobheadervalue1=filename%3DProposed_ASU_Contingencies_Topic_450_Disclosure_of_Certain_Loss_Contingencies.pdf&blobcol=urldata&blobtable=MungoBlobs

FASB Summary of Statement No. 158. Financial Accounting Standards Board. Retrieved http://www.fasb.org/summary/stsum158.shtml

Kastrup, L. (2013). Financial reporting implications under the Affordable Care Act. American Academy of Actuaries. Retrieved May 2, 2014 from http://www.actuary.org/files/HPFRC_White_Paper_on_ACA_and_FR_final_062513.pdf

Nussbaum, A. (2013). GE, IBM ending retiree health plans in historic shift. Bloomberg. Retrieved May 2, 2014 from http://www.bloomberg.com/news/2013-09-09/ge-to-ibm-ending-retiree-health-plans-in-historic-shift.html

Whitehouse, T. (2014). Benefits trend raises accounting issues, PwC warns. Compliance Week. Retrieved May 2, 2014 from http://www.complianceweek.com/benefits-trend-raises-accounting-issues-pwc-warns/article/345238/ [END OF PREVIEW] . . . READ MORE

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