Financial Accounting Standards Research Initiative

On Tuesday, Dec 1st, 4 pm ET, we will be joined by Patrick Finnegan, who was recently appointed to a 5-year term on the International Accounting Standards Board. Pat is a former Director of the Financial Reporting Policy Group at CFA Institute Centre for Financial Market Integrity, where he led a team responsible for [...] Read more > >

You are probably aware that someone has (apparently illegally) published email correspondence involving climate scientists at the University of East Anglia.  This prompts me to think of writing two posts.  Later on, if I get the courage, I will write a post about how we deal with messy data — the emails discussing the matter [...] Read more > >

For most of this decade, the Financial Reporting Issues Conference has been my favorite accounting event of the year.  Taking a Bayesian perspective, I also view it as the most informative:  every year, what I learn changes my beliefs more than any other conference. I will be writing some posts about the substance of the conference, [...] Read more > >

When the AAA-FASC committee wrote a letter opposing the Perlmutter Amendment, I asked “Are there any academics who would support such a proposal?” It turns out the answer is yes:  David Albrecht of Concordia College, and author of the blog The Summa (as in the book by Brother Luca Pacioli, father of double entry bookkeeping).  Here [...] Read more > >

The Perlmutter amendment that would allow a regulator to set GAAP is getting a lot of press.  But Congress members have more work in mind for the FASB.  Representative Scott Garrett has proposed an amendment that requires the FASB to study the economic effects of its recent securitization rules (FAS 166 and 167).  Apparently, Garrett [...] Read more > >

FEI just held their 28th Current Financial Reporting Issues Conference in NYC. Lots of big names in financial reporting were on the schedule, including several high-level representatives from the FASB and the SEC. You can read about some of what was said at the conference on the FEI blog (here and here).  Lots of interesting items.  [...] Read more > >

We reported last week on the Perlmutter amendment.  In the typically understated fashion of accounting professors, the AAA-FASC wrote a letter opposing it. Such an amendment would shift the power to promulgate accounting standards from the Financial Accounting Standards Board (FASB) to a Systemic Risk Oversight Council, and it would shift the objectives of financial reporting [...] Read more > >

That was just one of the many comments made by first-rate blogger Tyler Cowen of George Mason’s Economics Department, and author of Marginal Revolution (listed by the WSJ as one of the top 25 economics blog), during our phone conversation last week. Tyler is just one of many bloggers at GMU, which is taking a strongly [...] Read more > >

It was great to have Stephen Penman participate in our round table discussion this past week. It is worthwhile to listen to someone else’s views on standard setting, particularly when those views have been somewhat critical of the current state of standard setting. Although I still have many questions about the completeness of Stephen’s framework [...] Read more > >

In their joint meeting in Norwalk, Connecticut last month, the IASB and FASB affirmed an earlier decision that an “insurer should recognize all acquisition costs as an expense when incurred.  In addition, both Boards agreed that the insurer should not recognize a part of the premium as revenue (or income) at inception equal to the [...] Read more > >

One of the points that Stephen made early in his remarks was that while the objectives of financial reporting were fairly non-controversial, they didn’t give one any traction in deciding what sort of accounting we should have. As I listened to the rest of his remarks, I found myself having a similar sentiment about the “income [...] Read more > >

On Tuesday, Nov 17th, 4 pm ET, we will be joined by Susan Krische (University of Illinois at Urbana-Champaign).  Susan recently returned from an academic fellowship with the Office of the Chief Accountant at the Securities and Exchange Commission.  In light of her experience at the SEC, Susan will be leading a discussion on how [...] Read more > >

As you probably are aware, the Financial Accounting Standards Board recently instituted a Research Fellow Program. This program allows for one academic researcher (like myself) to come to the FASB each year for a 12-month position. In my opinion, having an academic researcher in house is an excellent way to both encourage new [...] Read more > >

The roundtable discussion with Stephen Penman yesterday was quite good.  Lots of good discussion in both voice and typed chat.  One thing I learned is that Stephen stresses subjectivity as a reason behind his views. While I am convinced that Stephen dislikes some forms of subjectivity, I think his views are more subtle than this.  [...] Read more > >

Here is the text of the letter the AAA Financial Accounting Standards Committee sent to Barney Frank and Spencer Bachus opposing Perlmutter’s amendment, which would allow a newly-created systemic regulator to override GAAP to achieve the goals of financial stability.  Are there any academics who would support such a proposal?  If you disagree with the [...] Read more > >

I just received an email from the AICPA with the Perlmutter (D-CO) amendment to the Financial Stability Improvement Act of 2009, which gives Congress the right to override GAAP they don’t like.  Not surprisingly, the AICPA opposes it.  Here is the amendment, in all its glory (emphasis mine): “SEC. 1103. PRUDENTIAL OVERSIGHT OF ACCOUNTING PRINCIPLES AND [...] Read more > >

In preparation for his FASRI Roundtable discussion, Stephen Penman has helpfully shared his CEASA White Paper on Financial Statement Presention, which you can download here. The paper discusses disaggregation in some depth, providing guidelines for how line items should be disaggregated on both the income statement and the balance sheet.  I need to read more carefully, [...] Read more > >

You may know Columbia Business School Professor Stephen Penman as the 14th-most downloaded author on SSRN.  Or you might know him as a Director of the Center for Excellence in Accounting and Security Analysis. Or perhaps as author of Financial Statement Analysis and Security Valuation. More recently, Stephen has been visible as a critic of the [...] Read more > >

Very interesting. http://hbr.harvardbusiness.org/2009/11/is-it-fair-to-blame-fair-value-accounting-for-the-financial-crisis/ar/1?cm_mmc=npv-_-HBR_UPDATE-_-2009-_-NOV Read more > >

Jeff Wilks has already noted the FASB/IASB decisions regarding lease accounting.  Last week’s meetings also included a number of tentative decisions on financial statement presentation.  Several decisions pertained to cash flow reporting and supplementary reconciliation schedules.  The Boards tentatively decided that entities should be required to use the direct method of presenting cash flows.  In [...] Read more > >