Task: Off-Balance Sheet Financing (OBSF) has been a concern of the accounting regulators. Recent FASB pronouncements have been closing the gaps in GAAP that allowed management to practice OBSF. SFAS No. 158: Accounting Statement for Pension/leases is an example of this trend.
Required:
Q1. Define OBSF and give examples showing how GAAP allowed firms this practice.
Q2. Explain how the "Delayed Recognition" approach adopted in SFAS No. 87 for Pensions represented an OBSF for employers.
Q3. Explain how SFAS 158 brought off-balance sheet obligations into the face of the balance sheet.
Q4. Explain the difference between GAAP and IAS (International Accounting Standard)