A Congressional Hearing on “Accounting and Auditing Oversight” was held yesterday (March 28) by the House Subcommittee on Capital Markets and Government Sponsored Enterprises.  Congressman Scott Garrett (R-NJ) chairs the subcommittee, which called James Kroeker (SEC), James Doty (PCAOB), Leslie Seidman (FASB), and Robert Attmore (GASB) as the first panel of witnesses.  Congressman Garrett indicated that [...] Read more > >

How to measure the costs and benefits of a standard?

The FASB’s Conceptual Framework imposes a cost constraint in U.S. GAAP (see paragraphs 35-39 of SFAC No. 8, Chapter 3), which essentially states that the Board must assess whether the benefits of a proposed standard justify its costs.  In recent weeks, several FASB constituents have urged the Board to give greater consideration to the cost [...] Read more > >

New FASRI Server

You might have noticed some interruptions to the FASRI site over the past few days.  We have been migrating the site to a new server, which caused some brief suspensions.  We are now up and running on the new server, which we hope will provide an improvement in the way content is organized and maintained [...] Read more > >

FAF Issues Inaugural Post-Implementation Review Report

Over a year ago, the FAF adopted a new program that would review major standards that have been outstanding for a period of time to assess whether the standard has achieved its financial reporting objectives.  This post-implementation review process was meant to improve the standard-setting process and facilitate more effective FAF oversight of the FASB [...] Read more > >

Questions for Bob Herz at the AAA Meetings

Hopefully, you have all heard by now that the Monday morning plenary speaker in Denver at the AAA Meetings is Bob Herz, former Chair of the Financial Accounting Standards Board. The format of his presentation will be slightly different from the traditional format. That is, Mr. Herz has agreed to address questions that have been [...] Read more > >

Permanent and transitory earnings: where did we get these terms?

In 1957, the Princeton Press published Milton Friedman’s famous book, A Theory of the Consumption Function.  An interesting assumption underlying the theory is that “the transitory components of consumption and income can be taken to be uncorrelated with the corresponding permanent components and with each, other.” One of the key inferences is that permanent (smoothed) consumption [...] Read more > >

What a Week!

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 > >

Do difficult-to-account for transactions deserve greater regulatory scrutiny?

Certain transactions are inherently difficult to account for. Investments in illiquid financial instruments may be impossible to value without heavy reliance on unverifiable assumptions from management. Transactions that include explicit or implicit rights of return must be recorded as sales or as a bundle of options, neither of which is quite accurate. Transactions with customers [...] Read more > >

Recycling Review Reports

Could AAA publications do this?  Submit to The Accounting Review, get rejected, but have your reports forwarded to a Section journal or Horizons for a decision there.  Read more about what the field of economics is doing here. Read more > >

Sauce for the Goose (business), the Same for the Gander (government)

Over the course of the past few months, I’ve reviewed a number of books and papers that were nominated for the 2010 AAA Wildman Medal Award, which seeks to recognize papers that use rigorous research methods to deal with current issues in accounting practice. One of the nominated papers was entitled, “Consequences of GAAP disclosure [...] Read more > >