Financial Accounting Standards Research Initiative

I’ve just finished reading the IASB/FASB exposure draft on revenue recognition, and I have all kinds of questions running through my head. But before I get to those questions, let me first say that I am very impressed with this document. In fewer than 90 paragraphs of guidance (ignoring application guidance), the IASB/FASB have laid [...] Read more > >

The FASB and IASB released their exposure draft of their proposed revenue recognition standards. From paragraphs IN8 and IN9 of the official document In summary, the core principle [of revenue recognition] would require an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that [...] Read more > >

**See bottom of post for a June 25 update.** After suffering through a 5-hour delay in Newark on Friday, it appears that I was not the only one about to be subjected to delay. Many of you have probably been wondering how the FASB and IASB were going to accomplish the monumental task of finishing all of [...] Read more > >

On Tuesday, May 4th, 4 pm ET, we will be joined by Tom Selling of The Accounting Onion. Tom will be discussing his opinions of standard setting in general, including fundamental questions regarding recognition, measurement and disclosure. In the process, he will also be providing his thoughts on selected portions of the current FASB/IASB [...] Read more > >

The SEC essentially punted today on the decision to adopt IFRS in the U.S.  Acknowledging that the SEC is in the same position they were in November 2008 (when the proposed roadmap was originally issued), Mary Schapiro said the SEC hopes to be in a position by 2011 to make this decision. One of the [...] Read more > >

On Tuesday, Jan 12th, 4 pm ET, we will be joined by Jim Leisenring. Jim is currently a member of the IASB, where he has been serving since 2001. Given his prior role as a director and later a board member at the FASB, Jim arguably has more standard setting experience than just about any [...] Read more > >

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 > >

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 > >

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 > >

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 > >

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 > >

In their joint meeting in Norwalk, Connecticut this past week, the IASB and FASB reached the tentative conclusion that lessors will no longer derecognize leased assets. Instead, lessors will recognize a receivable and a performance obligation with revenue being recognized over time. Some think this approach is more consistent with the proposed new revenue recognition [...] Read more > >

A student of mine brought to my attention an article in the Wall Street Journal September 24, 2009, “Investors Should Focus on Apple’s Core.”  In that article, Martin Peers points out that existing guidance for firms who have products that combine hardware and software, like Apple’s iPhone, required firms to obtain specific evidence about 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 > >

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 > >

The comment letter deadline for the IASB/FASB discussion paper on revenue recognition was June 19, 2009. The staff recently presented a high-level summary of the 200+ comment letters received by the boards. Given my recent posts (July 30 and Aug. 11) on the AAA FASC’s comment letter, I thought it might be useful to consider [...] Read more > >

As reported in the FEI Financial Reporting Blog, a CFO.com article by David McCann captured some recent remarks made by Wayne Carnall, the SEC Division of Corp. Fin. Chief Accountant.  In response to questions about whether firms would have to amend existing filings to make specific references from the legacy body of GAAP literature consistent [...] Read more > >

Following up on Lisa’s post, I see that the FASB has summarized the key conclusions of this week’s Board meeting: The Board agreed to propose a model to improve financial reporting for financial instruments.   The Board reached the following decisions: The Board agreed to propose that all financial instruments will be presented on the balance sheet at [...] Read more > >

The FASB announced today the addition of a disclosure framework project to their agenda.  The addition of the project appears to be motivated by feedback the Board received the ITAC and CIFR committees. In today’s press release, Chairman Bob Herz said: “Many constituents have expressed concerns about so-called ‘disclosure overload.’  While clear and robust disclosures are essential [...] 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 > >

Today during Office Hours, we had David Elsbree, Project Manager on the FASB’s project regarding disclosures for litigation-related loss contingencies.  During that discussion, two issues seemed to be at the heart of the debate over how the FASB should proceed with this project:  (1) Would  the required provision of potentially (upward) biased measures of contingent losses (as [...] Read more > >

Today’s session pertained to the Conceptual Framework Project. Ray Pfeiffer led the discussion. Ron Bossio, Senior Project Manager from the FASB and Kevin McBeth, Project Manager also from the FASB spoke to us about the progress on the conceptual framework project. Although we covered a lot of bases (including the infamous fair value topic), I think [...] Read more > >

The FASB has recently issued an exposure draft of a standard that would replace the current GAAP hierarchy (as dictated by SFAS  162).  The new hierarchy would simply consist of two levels:authoritative and non-authoritative guidance. In effect, the FASB’s new Accounting Standards Codification would become the sole source of authoritative accounting and reporting standards in the [...] Read more > >

A few weeks ago FASB Board member Leslie Seidman joined us for office hours.  We covered a lot of ground, and Ray has already written on some of her ideas for research.  I thought I would summarize her rather cautionary views on fair value accounting for financial instruments.  Playing to the academic audience, Ms. Seidman [...] Read more > >

The FASB just released a Proposed FASB Staff Position that would amend the other-than-temporary (OTT) impairment guidance in two FASB Statements (SFAS 115 and SFAS 124) and in EITF 99-20.  This Proposed FSP seems to make two big changes.  The first relates to the conditions under which management can avoid considering an impairment to be OTT.  Currently, [...] Read more > >

A new FASB Staff Position proposes a 2-step test to determine whether a market is not active. This will hardly satisfy those who think firms shouldn’t have to use fair value accounting for the assets in question in the first place.  But for those who are simply complaining that market prices are ‘fire sale’ prices, [...] Read more > >