The FAF’s inaugural review project examined FIN 48, Accounting for Uncertainty in Income Taxes, which was intended to increase relevance and comparability in reporting information about income tax uncertainties.  The final report was released on January 12 and can be accessed via the FAF website.  Academics can play an influential role in the PIR process.  Not only can our research inform regulators about the effects of promulgated standards, but we can become directly involved in the PIR process by reviewing the relevant academic literature, influencing the creation of surveys, and participating in the surveys. 

 Our next Roundtable will feature the FAF’s PIR team, who will explain the process, and Jennifer Blouin from Wharton, who played an important role in the FIN 48 PIR.  Jennifer will explain the academic’s role and the benefits she realized from being directly involved.  Now that the review process on FIN 48 is complete, the FAF is planning on starting over again on two new standards.  Come to the Roundtable to see how academics can influence the process.  One session of this Roundtable will be held during the normal day and time of the week, Wednesday, January 25^th at 4:00 pm (eastern time).  However, to maximize participation, we will also have an identical session on Tuesday, January 24^th at 4:00 pm (eastern time).  Choose the date that is most convenient for your schedule. 

 To participate in the Roundtable, please follow these instructions.

 1)  Go to http://intercall.webex.com anytime after 3:00 pm (New York time) on January 24 or 25. 

2)  Type in the following meeting number that corresponds with the session that you are attending:

Tuesday: 596 479 166

Wednesday: 596-828-391

and click “Join Now”.

3)  On the next page, fill in your name, email address, and the password “Fasri001” (case sensitive – same password for both sessions).  Then click “Join”. 

4)  After joining the meeting, you will be prompted for your telephone number.  Insert your telephone number and click the “Call Me” button.  Your phone will ring, which you can use to hear and speak.  Please remember to put yourself on mute when you are not speaking (can be done by clicking the mic next to your name).

5) If you experience trouble with the call-back feature, you can dial in yourself using the following numbers: 866-478-6348 or 224-554-0243.

The first FASRI Roundtable for 2012 will cover the newly proposed standard on Revenue Recognition.  FASB practice fellows Michael Breen (KPMG) and Heather Harris (General Electric) will lead the discussion.  Michael is a senior manager at KPMG and Heather is an Assistant Controller in the Global Mergers and Acquisitions department at General Electric.  Both Michael and Heather have been active in the Revenue Recognition project over the past several months and can provide answers to how the new proposal is likely to affect revenue recognition practices.  Revenue recognition is one of the most fundamental issues in accounting and affects many of the topics that we teach and research.  I anticipate the session will be informative and very worthwhile.

 The Roundtable is scheduled at 4pm eastern time on Wednesday, January 18. 

 To participate in the Roundtable, please follow these instructions.

 1)  Go to http://intercall.webex.com anytime after 3:00 pm (New York time) on January 18. 

2)  Type in the following meeting number: 594 228 179 and click “Join Now”.

3)  On the next page, fill in your name, email address, and the password “Fasri001” (case sensitive).  Then click “Join”. 

4)  After joining the meeting, you will be prompted for your telephone number.  Insert your telephone number and click the “Call Me” button.  Your phone will ring, which you can use to hear and speak.  Please remember to put yourself on mute when you are not speaking (can be done by clicking the mic next to your name).

5) If you experience trouble with the call-back feature, you can dial in yourself using the following numbers: 866-478-6348 or 224-554-0243.

For the upcoming semester, I hope to organize a set of Roundtables that will be of interest to all FASRI readers.  So far, I have finalized two Roundtables.  On January 18, Mike Breen and Heather Harris, two FASB practice fellows, will discuss the new exposure draft on Revenue Recognition.  They will highlight areas within the proposed standard that are most likely to have a significant impact on practice.  Revenue recognition is one of the most fundamental and critical aspects of accounting, and a topic that probably everyone talks about sometime during their courses.  I expect many of you will benefit from the Roundtable. 

On February 1, Denise Jones and Kim Smith will discuss their paper recently published in The Accounting Review on Other Comprehensive Income (OCI).  The FASB and IASB are very interested in the topic of OCI, which was discussed extensively at the most recent FASB/IASB Issues Conference that was held in Norwalk in December.  Several fundamental issues surround the reporting of OCI, many of which are addressed in Denise’s and Kim’s article.  I suspect Roundtable participants can have a productive discussion on this topic. 

Roundtables will be held on Wednesday afternoons during the upcoming semester beginning at 4:00 PM eastern time.  I hope you look for the upcoming announcements and decide to join us.  Also, if any of you have suggestions for future topics that would be helpful to standard setters and you’d like to hear about, let me know.

Russell will bring a unique perspective to his discussion topic of “Challenges and Opportunities of International Convergence.”  Obviously, this is a topic of high interest as the deadline approaches for the SEC to make a decision on whether to accept IFRS for domestic issuers.  The session will include a 15-20 minute presentation by Russell, and 40-45 minutes of Q&A.

The week immediately following Russell’s presentation (Sep 6^th), Joachim Gassen will lead a discussion on academic research related to international convergence.  Joachim is a faculty member at Humbolt University of Berlin and has several papers on IFRS. 

Together, the sessions with Russell and Joachim are meant to address the primary contemporary issues related to convergence, and promise to assist you with your teaching and research.  We hope you will put these events on your calendars and join us for the discussions. 

Participation:

FASRI Round Tables are conducted using WebEx. To participate, go to http://webex.com anytime after 10:00 am (New York time) on Tuesday, August 30^th.  Then: click on “attend a meeting”; enter the meeting number 768-752-162; fill in your name, email address and the meeting password, Fasri001 (case sensitive); click on “join”; and decide whether you want to use your computer or a telephone for audio and speaking.

If you choose to use your computer, click on “use computer for audio” and then click on “call using computer”.  Now you should be in the meeting and can use your computer speakers and microphone to participate. Please remember to mute your mic when you’re not speaking.

If you choose to use a telephone, click on “Enter a phone number” and enter your phone number.  You will get a phone call.  Press one on your phone keypad when prompted. Now you should be in the meeting and can use your phone to hear and speak.

If you receive an error message or need help at any time, contact me at 203-956-3472.

Hope to see you there!

“Difficult as the decision may be, it is hard to imagine the possibility of the United States not taking a positive decision.  … it is in the economic interest of the US to adopt IFRSs. As a signatory to G20 communiqués, the US has repeatedly expressed its support for global accounting standards.  But the main thing is this: if you believe in a global language for financial reporting, then IFRSs are the only possibility.  I am convinced that the United States will want to maintain its position of leadership in international financial reporting, and therefore it is hard to fathom a negative decision on the part of the SEC.”

While the above opinion might be biased, there is no question that the United States has demonstrated support for a single set of high quality standards that can be accepted worldwide.  However, is this really the correct course of action for the U.S. to take when U.S. GAAP is already the most developed set of standards in the world and arguably of higher quality than IFRS (of course, that could be debated)?  Then, there is the significant issue of whether the U.S. should give up their sovereignty over accounting standards. 

Why not simply continue with the working model established by the Memo of Understanding of working closely with the IASB in establishing standards that, while perhaps not exactly the same, are converged in most material respects while maintaining nuances based on differences of opinion on what constitutes the most decision-useful information?  Interestingly, the IASB’s vice chairman, Ian Mackintosh, was quoted as saying that joint work between the IASB and FASB would be less going forward if the SEC’s decision was to not adopt IFRS (click here for the article).  That comment is difficult for me to understand as I believe both boards have benefited from the cooperation. 

I know this is an area where academic research has something to say.  I would be interested in receiving feedback as to what inferences can be made from specific studies (either published or in working paper form) with respect to whether the U.S. should allow IFRS for domestic filers. 

The topic of our next Roundtable will be on international convergence.  I am pleased that Russell Golden, a FASB Board Member, will speak to us and give us his perspective on the challenges and opportunities related to international convergence.  If you are interested in this topic, and I suspect most of us are, then this Roundtable provides a unique opportunity for you to gain a better understanding of what U.S. standard setters are thinking about the topic. 

A formal announcement and details on how to join the Roundtable discussion will be forthcoming, but for now place a holder on your calendar to join us August 30^th, at 4:00 pm eastern time.

The answer to the latter is a clear “yes” because the new guidance requires substantially more disclosures for level 3 than for level 2.  This led to some very interesting discussion, which unfortunately was not archived.  In particularly, if you look at the first slide deck that Phil posted, slides 6 and 7 discuss the additional disclosures.  The reporting entity will group assets into categories, and for each category, the company must disclose the type of valuation technique used and the unobservable inputs.  Ben mentioned a few of FVM approaches currently used by companies:

non-binding brokers quotes:  The reporting entity gets an estimated price from a broker.  Since the broker is not offering to buy at the quoted price (hence the term “non-binding”), the broker might spend very little time preparing the FVM.  Another problem is that the reporting entity must ascertain details underlying the broker’s methodology in order to comply with the new disclosure requirements, but brokers are hesitant to provide information about their proprietary pricing models.

in house valuation experts:  For some reporting entities, executing the company’s business model requires frequent FVM’s.  These companies may hire valuation experts for other reasons, and as a result, will generate its own FVM for financial reporting.

binding broker quotes:  The broker promises to buy the asset for the quoted price (quote expires after a few days).  This almost sounds like level 1 FVM to me.

Some other FVM approaches were mentioned briefly, but I do not recall what they were.

Academic accounting researchers have shown great interest in companies’ accounting choices.  At first, the new FVM guidance that Ben discussed appears to mandate accounting policy, which makes it a poor venue for studying accounting choice.  But what seems unique is that firms can choose how to comply with the mandate (measure FVM using non-binding broker quotes, in house estimates, binding broker quotes, or multiple methods), and the firms are asked to make fairly transparent disclosures about these choices.

I asked Ben what factors are expected to drive the choice of FVM method.  One factor is whether in house valuation expertise is available, because if this expertise does not already exist, he doubted entities would develop it just for complying with the new guidance.  Second, he expected market pressure over time might influence the choice; the hypothesis (although he did not label it this way) went as follows – companies initially disclose a methodology that is pretty weak and subject to significant errors (e.g., non-binding broker quotes or FVM’s prepared by in house experts using questionable inputs), the market applies a larger cost of capital to those companies, the companies improve their FVM methods and disclosures, and the cost of capital falls.

Obviously an archival test of this hypothesis will have to wait until we have a long enough time-series of disclosures.  But I expect some academics will be looking closely at the new disclosures, either as preparation for future research or for interesting class discussions about accounting disclosure choices.

• First click on “Read more” below and then click here for the first slide deck.
• First click on “Read more” below and then click here for the second slide deck.

Unfortunate technological difficulties prevented us from recording the session.

The FASRI Round Table series continues at 4pm Eastern time on Wednesday, May 25th. Jeff Hales and Phil Shane will host the program, and our guest speaker is Ben Couch, who will talk about the new Accounting Standards Update (ASU No. 2011-04) on Fair Value Measurement (codification topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.

Ben Couch is a valuation expert at E&Y and is currently a project manager at the FASB in the middle of a 2-year practice fellowship. Undoubtedly, the entire academic financial reporting community would do well to have a primer in how audit firms evaluate the efficacy of level 2 and level 3 valuations in accordance with the new rules which update FAS 157.  This round table provides that primer and offers the opportunity for questions about issues relevant to your teaching and research programs. The session will include a 15-20 minute presentation by Ben, and 40-45 minutes of questions and insights from all round table participants. Please click here for the most recent information about the FASB’s fair value measurement project, and click here for the recently published ASU.

We hope you can join us for this discussion, as we’re sure you will find interesting applications to your teaching and research programs.  Please put this event on your calendar!

Participation:

FASRI Round Tables now are conducted using WebEx. To participate, either:

Follow the simple instructions at the registration site:

https://faf.webex.com/faf/j.php?ED=151006607&RG=1&UID=1066609172&RT=MiMxMQ%3D%3D

OR

send me an email at pbshane@fasb.org and I will return an email with a clickable link to the meeting registration site.

OR

go to http://webex.com anytime on May 25th.  Then: click on “attend a meeting”; enter the meeting number 483309515; fill in your name, email address and the meeting password, Fasri001 (case sensitive); click on “join”; and decide whether you want to use your computer or a telephone for audio and speaking.

If you choose to use a telephone, click on “Enter a phone number” and enter your phone number.  You will get a phone call.  Press one on your phone keypad when prompted. Now you should be in the meeting and can use your phone to hear and speak.

If you choose to use your computer, click on “use computer for audio” and then click on “call using computer”.  Now you should be in the meeting and can use your speakers and microphone to participate.

If you receive an error message or need help at any time, contact me at 203-956-5317.

See you there!

UPDATE: 

Here are two files for the roundtable:  a 2006 review paper by Christine Botosan called “Disclosure and the Cost of Capital:  What Do We Know?” and  recent working paper on voluntary environmental disclosures by Plumlee, Brown, Hayes and Marshall.

The FASRI Round Table series continues at 4pm Eastern time on Wednesday, April 6th. Rob Bloomfield, Jeff Hales and Phil Shane will host the program, and our guest speakers are Christine Botosan and Marlene Plumlee, both professors at the University of Utah.

This session continues our series of round tables aimed at providing input to FASB deliberations regarding a conceptual framework for disclosure. The session will include a 15-20 minute presentation by Christine and Marlene, and 40-45 minutes of open dialogue among all round table participants. Please click here for up-to-date information regarding Board and staff deliberations regarding the disclosure framework project.

We hope you can join us for this discussion, as we’re sure you will find interesting applications to your teaching and research programs.  Please put this event on your calendar!

Participation:

FASRI Round Tables now are conducted using WebEx. To participate, either:

send me an email at pbshane@fasb.org and I will return an email with a link to the meeting registration site.

OR

go to http://webex.com anytime on Wednesday, April 6th.  Then: click on “attend a meeting”; enter the meeting number 489090622; fill in your name, email address and the meeting password, Fasri001 (case sensitive); click on “join”; and decide whether you want to use your computer or a telephone for audio and speaking.

If you choose to use a telephone, click on “Enter a phone number” and enter your phone number.  You will get a phone call.  Press one on your phone keypad when prompted. Now you should be in the meeting and can use your phone to hear and speak.

If you choose to use your computer, click on “use computer for audio” and then click on “call using computer”.  Now you should be in the meeting and can use your speakers and microphone to participate.

If you receive an error message or need help at any time, contact me at 203-956-5317.

See you there!

The FASRI Round Table series continues at 4pm Eastern time on Tuesday, March 29th. Rob Bloomfield, Jeff Hales and Phil Shane will host the program, and our guest speaker is Russ Lundholm, Professor at the University of British Columbia.

 Russ will tee up a discussion of his disclosure-related research in the context of his recent working paper that develops a “competitive intensity” proxy based on textual analysis of corporate financial reports.

 This session continues our series of round tables aimed at providing input to FASB deliberations regarding a conceptual framework for disclosure. The session will include a 15 minute presentation by Russ, and 45 minutes of open dialogue among all round table participants. Click here for a research paper to read in advance of the round table.  Please click here for up-to-date information regarding Board and staff deliberations regarding the disclosure framework project.

We hope you can join us for this discussion, as we’re sure you will find interesting applications to your teaching and research programs.  Please put this event on your calendar!

 Participation:

 FASRI Round Tables now are conducted using WebEx. To participate, either follow the instructions at:

https://faf.webex.com/faf/j.php?ED=148605117&RG=1&UID=1061972392&RT=MiMxMQ%3D%3D

OR go to http://webex.com anytime after 3:45pm on Tuesday, March 29th.  Then: click on “attend a meeting”; enter the meeting number 481985370; fill in your name, email address and the meeting password, Fasri001 (case sensitive); click on “join”; and decide whether you want to use your computer or a telephone for audio and speaking.

 If you choose to use a telephone, click on “Enter a phone number” and enter your phone number.  You will get a phone call.  Press one on your phone keypad when prompted. Now you should be in the meeting and can use your phone to hear and speak.

 If you choose to use your computer, click on “use computer for audio” and then click on “call using computer”.  Now you should be in the meeting and can use your speakers and microphone to participate.

 If you receive an error message or need help at any time, contact me at 203-956-5317.

 See you there!

As a bit of personal commentary, I find it interesting to think of a comprehensive disclosure framework in the context of the recent research on textual analysis, in which researchers use computer programs to process the non-financial/non-tabular content of annual reports, other SEC filings and other disclosures.  It isn’t hard to imagine a future in which preparers tag qualitative textual discussions with metadata that would make it much easier to link the discussion to specific line items or the types of disclosures that the Disclosure Framework project team has started to categorize.  To the extent the goal of the project is to address information overload, I can’t think of many better ways than making textual data more easily machine-readable.