Reporting entities and their employees are required to comply with a series of reporting obligations. These compliance obligations apply to published reports, ancillary reports, violations of the requirements of the NFRD reporting entity, and the results of reclassification and auditing of financial statements.

An entity should be aware that the NFRD is likely to promote changes that by their nature affect the ability to meet obligations in relation to reporting entities and report entities that meet those requirements. The specific nature of these changes may not be clear at the outset, so the words “due to this legislation” will be used in a number of places to make this clearer.

If the financial statement involves adjustments for any adjustment to an accrual basis, for example, the report will say “this reflects adjustments in a report on prior period public investments with respect to accrual basis of prior period investments, and reflects the new related account adjustments”. While this report will use the words “results of reclassification and auditing” to highlight this NFRD change, it will also indicate what it is not: “results of reclassification and auditing.”

Substantive changes may also result from an audit. These credits are called “reclassification and auditing” and they will be listed at the end of the year for both the reporting entity and the report, generally in a different numbering sequence from corresponding accrual credits on the balance sheet. As a result of this change, a new accounting statement will be required by the new legislation. This new statement will identify the report and also mark the original report as “the traditional accounting presented by the organization for NFRD reference purposes”. This can be a disappointment for many report holders, especially if they believed that their report had met all requirements.

For example, accrual basis adjustments in the old report had been reflected on a constant basis in the new report. Breakthroughs in NFRD accrual basis adopted, and reporting entity reclassifications and auditing, caused a wealth of adjustments to reported amounts that are not shown in the old report. These adjustments will soon be reflected in the report itself, but not in an accrual basis report.

Note that in the financial statement description of a financial statement that has an accrual basis, these adjustments do not apply. However, therefore the use of the accrual basis in a report must provide a clear, concise and accurate reading of the financial statement. Since accrual basis adjustments allow for interpretation, and may not be incorporated in the reports, how the complex issues of accrual basis use, accrual basis reporting reconciliation, and inter-company accounting rules impact the effectiveness of the reporting are important for the public to understand.

These general requirements could also apply to affiliates to an aggregate of 20 penetrateMajor Public Accounting Entities beginning January 1, 2008.

In summary, by the end of December 31 of 2008, reporting organizations at all sizes will be required to report 20 statements that are consistent with the accrual basis standard, the U.S. GAAP (Generally Accepted Accounting Principles) rules, and which support the new methodology for statement disclosures.

The report should include the following:

There is a work plan that defines the method of preparing the financial statement. This plan will be executed by a senior financial NFRD report writer, accounting professional with an accounting background, and the CFO of the reporting entity or branch.

An outline of the new report should be available to all participants before the first day of the reporting entity’s annual financial cycle. It is important to recognize that the first year of reporting will have more activities than the following annual period.

The reporting entities will not be required by this legislation to print NFRD statements of financial position for most entities less than three years in existence.

The reporting process will be required to meet certain reporting requirements, including documentation and a completion of a new report for the entity.

Access to report will be required by the law, and is required by the accounting professional, who reviews this raise to the public.