Financial Accounting Standards Research Initiative

A FASRI Pollster Click this link for a very short survey about FASRI’s Roundtables and Blog.  The fact that you are reading this means you are part of our sample universe.  It only takes a few minutes and will be a huge help.  Thanks! Read more > >

This weekend is the JAE conference.  Even if you weren’t invited, you can download the papers from the conference website.   These will undoubtedly be highly cited papers, and form the basis for PhD seminars comprehensive exams for years to come…but they are LONG! I am printing them out as I write this.  The six papers total [...] Read more > >

That would be the implication of this research study, which makes a fairly simple statistical point.  We already know that papers are more likely to be published if they include a positive result (they reject the null).  Less politically correct to admit is that when the data gets messy, researchers tend to make a lot [...] Read more > >

A very interesting set of posts on ‘Economics of Contempt’ on financial innovation and credit rating failures.  A few key points: Disclosure was good enough to make AIG’s exposure to Credit Default Swaps well-known.  The real problem, according to this anonymous structured finance lawyer, was that the ratings on lower-tier tranches became increasingly generous over the [...] Read more > >

Are you ready for earlier revenue recognition (and more estimation)?  The FASB approved an EITF consensus (issue 08-1) this week in which the EITF dropped one of the key requirements that often precluded revenue recognition for delivered items in a multiple-element arrangement (think Apple and iPhones). In current accounting standards (EITF 00-21 or FASB Accounting [...] Read more > >

I am in the San Jose airport leaving the Engage! Expo, a 2-day conference on Virtual Worlds.  It turns out that the technology we are using for FASRI is pretty popular, and as a favor to some friends, we are letting them use our LIVE page to stream a conference at Sun Microsystems.  Just click [...] Read more > >

FASB made some decisions on Financial Statement Presentation on Wednesday.  Here is part that is related to FASRI’s research study, presented two days earlier: The Board decided to retain an approach to classification within the business section that is based on how a reporting entity organizes its activities and how it uses its assets and liabilities. [...] Read more > >

On Wednesday, Sept 30th, 11 am ET, we will be joined by Kathy Petroni (Michigan State University). Kathy will be talking about her paper, entitled “CFOs and CEOs:  Who Have the Most Influence on Earnings Management?”  The paper is forthcoming in the Journal of Financial Economics, and is co-authored with John (Xuefeng) Jiang and Isabel [...] Read more > >

I presented FASRI’s report on Financial Statement Presentation to the IASB (last Thursday) and to the FASB (yesterday).  The report is based on an experiment conducted with Frank Hodge, Pat Hopkins and Kristi Rennekamp.  Several Board members seemed pleasantly surprised by the ability of the research to address the issues being deliberated, and are clearly [...] Read more > >

  I thought we had a great discussion last Wednesday  regarding the link between revenues and expenses.  For those who could not attend, you can listen to the archive session.   One of the key results in the Donelson, Jennings, and McInnis paper is that the special items component of earnings has increased recently, and this component [...] Read more > >

The question of whether competition among standard setters leads to improved, high-quality reporting is an oft-debated topic and one that has come up on the FASRI research blog before (you can read the extensive commentary that topic induced here).  While academics might disagree, the SEC has already clearly voiced their concern about competition inducing a [...] Read more > >

On Tuesday, Sept 22nd, 4 pm ET, we will be joined by Paul Glotzer. Paul is a project manager at the FASB and has extensive experience working with small companies.  He is also the key liaison with the FASB’s new advisory group, the Private Company Financial Reporting Committee, and is currently working on, among other things, [...] Read more > >

We have a strong University of Texas presence at FASRI Round Tables (Lisa Koonce and Nick Seybert are UT faculty and regulars at FASRI; Jeffrey Hales, FASB research fellow, is a former faculty member at UT; and this week’s presentation is by the UT faculty trio of Dain Donelson, Ross Jennings, and John McInnis).  However, [...] Read more > >

It seems odd that the finger pointing doesn’t stop.  http://finance.yahoo.com/banking-budgeting/article/107711/accountants-misled-us-into-crisis.html Read more > >

Yesterday (September 10, 2009), Rob Bloomfield posted regarding a legal perspective on FASB Accounting Standards Codification Topic 450 (FAS 5 – Accounting for Contingencies) and proposed changes in the disclosure rules for litigation-related contingencies.  This post relates to both the FAS 5 issue as well as an earlier discussion regarding conducting research with the FASB. While serving [...] Read more > >

From the Financial Executives Institute blog (now added to our blogroll), passage by the House of the ‘Promoting Transparency in Financial Reporting Act, H.R. 2664: …among other things, PTFRA would require that, beginning in 2009, and for five years thereafter, annual testimony of the SEC, FASB and PCAOB Chairmen (or their designees) would be provided to [...] Read more > >

#gallery-1 { margin: auto; } #gallery-1 .gallery-item { float: left; margin-top: 10px; text-align: center; width: 33%; } #gallery-1 img { border: 2px solid #cfcfcf; } #gallery-1 .gallery-caption { margin-left: 0; } On Wednesday, September 16th, 11 am ET, Dain Donelson, Ross Jennings, and John McInnis, all of the University of Texas at Austin, will join us to discuss their recent paper entitled “Changes over Time in the Revenue-Expense Relation: Accounting [...] Read more > >

Last week I suggested you take a look at how lawyers view accounting, courtesy of the popular and thoughtful legal blog, The Volokh Conspiracy.  This week, I am glad to report that conspirator (and American University law professor) Kenneth Anderson has given me the opportunity to write a guest post getting lawyers insights into a [...] Read more > >

Economist-bashing has been a popular sport lately, with current criticism coming from the left.  Paul Krugman weighed in with a long piece in the New York Times, and now the Huffington Post has an article claiming that the Federal Reserve has quashed research critical of its policies by spreading around lots of money and prestige.  [...] Read more > >

What industries have the largest percentage of their assets measured under fair value standards?  Whisper your answer to the person sitting next to you before clicking to see the answer, courtesy of this paper by Gartenberg and Serafeim of HBS. Click on the graph to enlarge it.  I was surprised to see the high proportions in [...] Read more > >

Georgetown finance professor James Angel has written an interesting piece praising the benefits of what he calls mark-to-management (or what we fair value wonks would call Level 3 inputs), and argues the benefits of including all three dimensions of valuation (cost, market price and management models) in disclosures.  Of course we can’t recognize all of [...] Read more > >

Do we have inconsistency in application of FV measurement?  No surprise I guess.  Note this:  Beginning in Q2 2009, the fv of companies’ loan portfolios was a required quarterly disclosure.  Previously, it was only an annual disclosure. Review some banks.  You might find a huge discrepancy in the fraction .. fv/carrying value.  Certainly banks have different [...] Read more > >

FASB is circulating an Accounting Standards Update that would clarify required disclosures about fair values.  Particularly noteworthy is that the Update proposes a detailed “roll forward” of fair value measurements using significant unobservable inputs (”Level 3″), which would provide a clear breakdown of how the total level 3 measurements changed as a result of: transfers in [...] Read more > >

We were going to have a Round Table discussion this coming week, but Labor Day has messed things up a little.  So instead, click on this link to see how lawyers view accounting, courtesy of the excellent law-professor blog The Volokh Conspiracy.  Lesson 1 is:  most of them know surprisingly little, even if they are [...] Read more > >

This is a guest post by accounting historian Steve Zeff.  The title is mine, though.  This article by Steve is recommended for those who want their history lesson extended– RJB There has been some discussion of “matching” and the income statement v. balance sheet approaches. Jeff Wilks wrote, “I’d just love to see someone explain what [...] Read more > >

http://www.bloomberg.com/apps/news?pid=20601109&sid=a0kvXdQtvCWw Read more > >

To prepare for tomorrow’s round table discussion (Wed Sept 2, 11am ET) on FASRI’s Financial Statement Presentation research, take a look at this report on an experiment I conducted with Frank Hodge, Pat Hopkins and Kristi Rennekamp.  A few points I’d like to make off the bat: I fully expect this research to result in a [...] Read more > >

Ever teach the statement of cash flows–indirect method?  Have you had that class going along with you, they are really getting it … … and then it just becomes overload on the adjustments and you lose them??  Check out this link. It is hilarious. Michael Granof here at UT shared this with me this a.m.  [...] Read more > >