Financial Accounting Standards Research Initiative

I have been in residence at the FASB for one week and I must admit that my head is spinning with all the opportunities to get involved. I want to do them all! It’s been quite a first week. The day after I arrived Bob Herz announced his retirement effective September 30th — I hope [...] Read more > >

A recent Journal of Accountancy article states that the SEC Chief Accountant Jim Kroeker would support the FASB’s cutting the number of convergence projects due for completion in 2011. Here’s one excerpt from that article: “June 30, 2011, is an arbitrary deadline and it’s not one that’s been put in place by the SEC or by [...] Read more > >

Next Monday (April 12) is the first meeting of the Blue Ribbon Panel on Standard Setting for Private Companies.  This has the potential to be a very wide-ranging and interesting continuation of a very long-standing discussion about GAAP for non-public entities. As I understand it, many years ago, the debate began and was labeled the “big [...] Read more > >

I just read an article (p. 22) about the CPA examination changes effective Jan. 1, 2011. The AICPA official release can be found here. There are several major changes taking place at the same time. I list three below: 1. Switch from two case-based simulations to six or seven task-based simulations. 2. Testing of the organization and use [...] Read more > >

In my technical accounting research class and in recent consulting work, I often have been reminded of the need for reasoned judgment in our profession. With the general move toward more objectives-based standards (using the SEC parlance), the need for professional judgment only will increase.  Recognizing the need to teach and understand what professional judgment [...] 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 > >

I just read the abstract of a forthcoming paper (Kvaal and Nobes 2010) that compares the accounting policies of blue chip companies in the largest five stock markets that use IFRS. By comparing the policy disclosures in annual reports, the authors find “significant evidence that pre-IFRS national practice continues where this is allowed within IFRS.”  [...] 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 > >

Details on participation are here. On Wednesday, July 22nd, 11am ET, we will get a preparer’s perspective on the state and future of financial reporting standards from Bob Laux, Senior Director of Financial Accounting and Reporting at Microsoft.  Mr. Laux is responsible for Microsoft’s financial accounting, including  responding to GAAP questions and issues within Microsoft and [...] 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 > >

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 > >

In a recent article by Özgür Gürek, Bernd Irlenbusch, and Bettina Rockenbach entitled “The Competitive Advantage of Sanctioning Institutions” (published in Science in 2006), the authors study human institution-choice behavior and cooperative behavior in a setting where there is permanent competition between a sanctioning institution and a sanction-free institution.  In the sanctioning institution, subjects may [...] Read more > >

As part of my reading assignment for the AAA Doctoral Consortium (on New Media, Research and Standard Setting), I have asked Consortium students to write a blog piece or two.  Welcome to FASRI.net, Willy Choi, and thanks for a strong first contribution!  –Rob B. After reading a recent literature review on accounting standard convergence by [...] Read more > >

This week in Research Office Hours, Christian Leuz (Chicago) presented a paper that he wrote with Luzi Hail (Penn) and Peter Wysocki (MIT), entitled “Global Accounting Convergence and the Potential Adoption of IFRS by the United States: An Analysis of Economic and Policy Factors.” The paper is a comprehensive review of the literature on international [...] Read more > >

On the heels of this week’s excellent presentation by Christian Leuz and related discussion about the factors related to potential IFRS adoption in the U.S., I was reminded of a very interesting and related article written by George T. Tsakumis, David R. Campbell, Sr., and Timothy S. Doupnik that appeared in the Journal of Accountancy [...] Read more > >

Office hours tomorrow (4pm ET April 7), University of Chicago Prof. Christian Leuz will be leading a discussion on international convergence.  Christian is in an excellent position to do this:  as I mentioned in this posting on research by Ramanna and Sletten, Christian is one of the authors of a literature review on international convergence–the [...] Read more > >

The FASB wrote a comment letter to the SEC on the roadmap to  international convergence, accompanied by a tour-de-force literature review by Luzi Hail, Christian Leuz and Peter Wysocki. The upshot of the research is that the US is unlikely to to see strong benefits to a formal convergence process, in part because our accounting [...] Read more > >