Financial Accounting Standards Research Initiative

We won’t have any office hours this week, because we are in the midst of two transitions.  First, Jeffrey Hales replaces Ray Pfeiffer as FASB Research Fellow, so they will both be tied up.  And I am working with Remedy Communications to make the transition to a version of office hours that will allow people [...] Read more > >

As I mentioned during a recent session of office hours that I hosted, I believe there are a number of persistent myths in accounting that seem to get passed on from generation to generation.  I promised to share them on the blog, so here they are.  These are essentially a collection of statements that I [...] Read more > >

Last week, a revised version of “A Research Based Perspective on the SEC’s Proposed Rule on Roadmap for Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards (IFRS) by U.S. Issuers,” comments from the Financial Accounting Standards Committee of the American Accounting Association, appeared on SSRN.  In this post, I offer [...] Read more > >

I have almost recovered from the AAA Doctoral Consortium.  This 4-day marathon gave some 90 or so doctoral students the chance to hear from over a dozen faculty on both research topics and on career advice from (in no particular order): Jim Hunton Chris Ittner Greg Waymire Bob Yetman Linda Bamber Hollis Ashbaugh-Skaife Paul Healy Jagan Krishnan Don Moser Karen Nelson Vernon Richardson Sonja Rego We were joined [...] Read more > >

The issue of accounting for contingent rentals was a big part of the recent research brainstorming session on leasing.  I think that academics may have something to offer the FASB and others related to accounting for contingent rentals.  In particular, what can economic/finance theory tell us about the desirability of capitalizing expected contingent rentals? One of [...] Read more > >

We often hear the argument that accounting policy shouldn’t matter since it doesn’t change the underlying economics of a transaction or event.  Preparers, however, often act as if the accounting does matter (think pensions, stock option expensing, other comprehensive income, just to name a few).  Here’s another example… The FASB just passed two new standards, SFAS [...] Read more > >

The current financial crisis is sure to bring about a wave of new laws and regulations.  These will have far-reaching and perhaps long-lasting effects on not only financial institutions, but on all firms as well as investors and other parties.  Some are already questioning whether any new regulations will be effective, and whether their benefits [...] Read more > >

The mission of FASRI is to facilitate the communication between researchers and standard-setters. Needless to say, one important way to judge the usefulness of accounting academic work is to see to what extent the research work can inform regulators of the policy implications. In a world that the regulation governing financial reporting and disclosure is [...] Read more > >

Here’s my opinion about financial reporting research and this blog and second life. I really think it’s being underutilized. As Rob Bloomfield said, ideas are all over the place in these sessions. I have come away from them with 3 ideas so far (and I’ve had to miss a fair number of these [...] Read more > >

In our next session of office hours (Tue, June 16th, 4pm ET), we will have our second brainstorming session. For those of you who couldn’t make the first brainstorming session, Bob Lipe led us in a discussion of research ideas related to leasing.  As in any good brainstorming session, Bob wasn’t just giving away research ideas, [...] Read more > >

Replication is one of the fundamental tenets of scientific inquiry, and the absence of replication in accounting is a non-trivial issue for initiatives such as FASRI.  Understanding the need for replication involves understanding the consequences of not replicating.  To illustrate, I was recently speaking with a faculty member about a NOVA episode (Intelligence Overload) on [...] Read more > >

One of the goals of international convergence is harmonization of accounting standards and increased comparability in financial reporting. However, even with convergence financial reporting differences will remain across countries. Some differences will stem from fairly obvious and observable sources, like countries’ various legal environments. Other sources of financial reporting differences, like cultural influences, are likely [...] Read more > >

While some may believe there are limits to the effectiveness of behavioral research in generating evidence on matters under consideration by standard setting agencies, there is no doubt in my mind that such research can contribute to financial accounting standard setting. At a recent doctoral consortium I attended, a certain comment sparked a debate around [...] Read more > >

In reading the FASB’s Discussion Paper on Revenue Recognition with Contracts with Customers, what immediately stands out is the intended breadth of the proposed model.  The Discussion Paper states that the model would apply to “all contracts with customers”, with contract being very broadly defined, although still consistent with IASB and commonly used US legal [...] Read more > >

Over the past few months, institutional ”experts” and politicians have cited fair value accounting (SFAS 157) as the primary cause for the meltdown experienced by the financial markets (see for example, the CNBC segment on September 30, 2008). Regardless of the validity of these statements, one clear implication of this debate was the increased political [...] Read more > >

Kathy Petroni (Michigan State) will be joining us June 10th, 11am ET, to talk about her paper “Comprehensive Income:  Who’s Afraid of Performance Reporting?”. The paper, co-authored with Linda Bamber, John Jiang and Isabel Wang, now forthcoming in The Accounting Review, touches on some timely and controversial topics. For starters, let me say that the [...] Read more > >

Another student guest blogger.  See the comment thread for my own remark on this topic, which promises to be very interesting over the coming year.  –RJB One of FASB’s current projects involves providing guidance to accounting issues such as accounting for Emissions Trading Schemes.  This project is important because many environmental and ecological accounting concepts are [...] Read more > >

We had a very interesting session yesterday to brainstorm ideas on leasing.  Thanks to another doctoral student for summarizing key parts of the discussion.  –RJB Despite the loss of power of our campus 15 minutes prior to the beginning of the office hour and the rush to set up everything on our backup battery, I, along [...] Read more > >

Another Doctoral Consortium post–this one from a managerial accountant!  Whose to say we can’t all learn from one another….RJB. Nonfinancial performance measures (NFPM) are parameters used to evaluate nonfinancial performance aspects of an organization.  Frequently the MD &A or company web pages that disclose information include Key Performance Indicators (KPI) or Non-Financial Performance Measures.  Researchers have [...] Read more > >

As previously announced, we are having a brainstorming session on leasing research today, 4pm ET for today’s office hours. To inspire you, the post Bob Lipe has even suggested some background questions (see link above). He has now provided his own solutions, so you can check your answers. Details on getting to office hours are here. Read more > >

Another blog piece from a Doctoral Consortium Student (Dina F El-Mahdy from Virginia Commonwealth University).  Enjoy!–RJB I came across Holthausen and Watts’s (2000) working paper on SSRN and I find it a good starting point to open a discussion on the usefulness of value relevance research to the standards’ setters. This working paper was prepared for [...] Read more > >