What is Financial Statement Comparability?

As with many terms in financial reporting, the term comparability means different things to different people. Recently, I’ve read a number of papers that shed academic light on financial statement comparability, which means that the researchers had to define what they mean by comparability and then select an appropriate proxy for that construct. In this [...] Read more > >

Pervasive Evidence

Current revenue recognition criteria are easy to talk about in class but coming up with concrete examples, using companies that students have heard of has always been challenge for me. Well not any more. A recent Accounting Onion post highlighted a great example of an issue with the criteria requiring pervasive evidence of arrangement before [...] Read more > >

Favorite OCI Item Anyone?

Other Comprehensive Income has appeared in a couple of different posts recently.  It plays a role in pension accounting (see “is it time to fix accounting for pensions”).  The blog also reported that the FASB recently restricted the potential methods for disclosing OCI. The latter post raised some general questions about distinctions between net income [...] Read more > >

A Little Discretion Here, A Little Discretion There

Lease accounting has received a lot of attention recently, given the fairly substantial changes being proposed by the FASB and the IASB in their joint project on lease accounting. One area of lease accounting that hasn’t raised as much discussion is how to account for short-term leases (i.e., leases with terms of less than one [...] Read more > >

Is it time to “fix” accounting for pensions?

On June 16, 2011, the IASB released its amendments to IAS 19 (Employee Benefits).  David Zion, accounting research analyst for Credit Suisse, reviews the implications of the amendments and concludes that “now it’s FASB’s turn” to “fix” pension accounting. In fact, he recommends that the FASB simply expose the new IASB rules, as is, to FASB [...] Read more > >

More on Disclosure

I told a brand new PhD student here at The University of Texas, Greg Capps, about my regular blogging on the FASB disclosure project. He had an interesting story to tell me. He said… “In my auditing days, perhaps the worst thing we did to a client was hand them the 250-page GAAP Disclosure Checklist [...] Read more > >

Accounting quality and backdoor listing

I got an email alerting me to an interesting news item from Bloomberg.  The story discusses how some Chinese firms become publicly traded in the U.S. but would not qualify to be listed in Hong Kong.  The story mentions that 98 Chinese companies used “reverse-merger” to get listed in the U.S.  “The MSCI China Index [...] Read more > >

Own Credit Risk

I have started to think recently quite a bit about firm’s own credit risk and I think it is an area research has the potential to be helpful to standard setting. Barth Hodder and Stubben (TAR 2008) investigate the association between equity returns and credit risk changes. Consistent with Merton (1974), the relation between credit [...] Read more > >

Sir David Tweedie is an “Accounting Rock Star”

…or so says The Economist in this article. While I generally think highly of the The Economist, this article contains one of my pet peeves, which is a loose discussion of fair value. In particular, the article states that “In 2009, under its previous chairman, Bob Herz, FASB narrowly voted 3-2 that all assets should [...] Read more > >

Program Accounting for Costs

The IASB/FASB recently affirmed an earlier decision not to rewrite standards on inventory cost accounting as part of its revenue recognition project.  Other than the limited guidance already covered in the proposed new standard (on topics such as setup costs for service contracts, precontract costs, and inventory of a service provider), the boards have left [...] Read more > >