Deferred Taxes: Compliance and Understandability.

The article analyzes practices in reporting deferred taxes and the degree to which disclosures of deferred taxes are accomplishing the objectives of the U.S. Financial Accounting Standards Board. Over 200 firms was selected and their accounting for deferred taxes were examined. The disclosures relating to deferred taxes are not informative. Most firms discuss their accounting for deferred taxes in a footnote in the financial reports and authoritative bodies has been prompted to make greater attempts at disclosure.