Financial Accounting Standards Research Initiative

As most FASRI followers are aware, the IASB and FASB are revising their Conceptual Frameworks.  The new and old frameworks posit that relevance of information for making decisions is a key attribute for determining if a particular number should be included in financial reports. I recently attended a presentation of a research paper by [...] Read more > >

In class yesterday, I stumbled upon an interesting apparent inconsistency between accounting for pensions and the accounting for compensated employee absences, which I had taught several weeks ago. When teaching my students about accruing for vacation pay, I observed that it seemed that if we knew for certain that employees were likely to get a raise [...] Read more > >

How often do we get to use big esoteric words from philosophy when we are talking about accounting standards?  Not often enough! Usually, the only philosophical terms we use are ‘normative’ and ‘positive,’ and I think many of us are pretty comfortable with the notion that standard setters are trying to answer normative questions (what should [...] 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 > >

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 > >

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 > >

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 > >

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 > >

It is the rare academic article that explicitly considers the objective function of the regulator.  William Bratton is a law professor from Georgetown who takes exactly this focus, and will joins us at the FASRI Roundtable on Wednesday, October 14th at 11am ET to lead us through the thicket of political pressures and machinations that [...] Read more > >

By now, most academics with an interest in standard setting are aware that the FASB and IASB view assets and liabilities as ‘primary’ elements of financial statements, from which income is derived.  However, it is all too easy to see primacy as indicating importance, which I suspect Kothari, Ramanna and Skinner have done in their [...] Read more > >

Reading Kothari, Ramanna and Skinner’s answer to the question “What Should GAAP Look Like?” makes me want to get a better handle on the different perspectives academics are bringing to their criticism of accounting standards and the standard-setting process.  This will probably be the first of several posts, and I want to start with the [...] 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 > >

One of the topics that came up in last week’s Round Table on Alternative Conceptual Frameworks was a discussion of the true and fair override. It came up when we were talking about one difference between US GAAP and IFRS being that the FASB’s conceptual framework is not authoritative. Even though IFRS requires [...] Read more > >

During today’s Round Table Discussion, an issue arose as to why (some, many?) accountants feel the need for a conceptual framework.  One contributor noted that Basu and Waymire have a paper that observes other business disciplines (e.g., marketing) do not appear to have conceptual frameworks.  Why accounting? My own speculation is that while accounting and marketing [...] Read more > >

Following up on my last post, I had a very entertaining discussion with a Very Successful Accounting Researcher (VSAR) last week at the AAA meetings on the topic.  After VSAR criticized some decision or other of the FASB, I asked “Why do standard setters make such awful decisions?”  We were talking in a noisy room [...] Read more > >

Everyone, it seems, likes to complain about the decisions of the FASB and IASB.  Some complain that the Boards are too beholden to the wishes of preparers, by allowing them to park debt off their balance sheets, hide volatile income numbers in the Statement of Changes in Shareholder’s Equity (rather than running through earnings), and [...] Read more > >

Tuesday, August 11th at 4pm we will be discussing two alternatives to the FASB’s Conceptual Framework Project. One is this document from by the AAA’s Financial Accounting Standards Committee, which Jeffrey has already written about.  I dissented from this document, primarily because it didn’t attempt to specify the objectives of financial reporting (you can read [...] Read more > >

The AAA’s Financial Accounting Standards Committee recently put together a proposal for an alternative conceptual framework. Conceptual frameworks (CF), by their nature, deal with such fundamental and far-reaching concepts that these types of intellectual ventures are bound to generate disagreement. This proposal is no exception, as evidenced by the dissenting opinions, and is [...] 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 > >

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 > >

For our Wednesday, April 15th session (11am ET), Office Hours will focus on the Conceptual Framework Project.  Leading the discussion will be Ron Bossio, Senior Project Manager, and Kevin McBeth, Project Manager, from the Conceptual Framework Project Team.  You can read about the project itself on the FASB’s Conceptual Framework Project Page. Information on [...] Read more > >