Manipulating relevance

As most FASRI followers are aware, the IASB and FASB are revising their Conceptual Frameworks.  The new and old frameworks posit that relevance of information for making decisions is a key attribute for determining if a particular number should be included in financial reports. Read more > >

The Definition and Measurement of Liabilities

In class yesterday, I stumbled upon an interesting apparent inconsistency between accounting for pensions and the accounting for compensated employee absences, which I had taught several weeks ago. When teaching my students about accruing for vacation pay, I observed that it seemed that if we knew for certain that employees were likely to get a [...] Read more > >

Deontology and Consequentialism in Standard Setting

How often do we get to use big esoteric words from philosophy when we are talking about accounting standards?  Not often enough! Usually, the only philosophical terms we use are ‘normative’ and ‘positive,’ and I think many of us are pretty comfortable with the notion that standard setters are trying to answer normative questions (what [...] Read more > >

2009 FASB-IASB Financial Reporting Issues Conference

For most of this decade, the Financial Reporting Issues Conference has been my favorite accounting event of the year.  Taking a Bayesian perspective, I also view it as the most informative:  every year, what I learn changes my beliefs more than any other conference. I will be writing some posts about the substance of the [...] Read more > >

How would a transaction-based framework account for warranties?

It was great to have Stephen Penman participate in our round table discussion this past week. It is worthwhile to listen to someone else’s views on standard setting, particularly when those views have been somewhat critical of the current state of standard setting. Although I still have many questions about the completeness of Stephen’s framework [...] Read more > >

Some thoughts about the “income statement view,” performance management, and speculation in accounting

One of the points that Stephen made early in his remarks was that while the objectives of financial reporting were fairly non-controversial, they didn’t give one any traction in deciding what sort of accounting we should have. As I listened to the rest of his remarks, I found myself having a similar sentiment about the [...] Read more > >

AAA-FASC Writes Congress on Perlmutter Amendment

Here is the text of the letter the AAA Financial Accounting Standards Committee sent to Barney Frank and Spencer Bachus opposing Perlmutter’s amendment, which would allow a newly-created systemic regulator to override GAAP to achieve the goals of financial stability.  Are there any academics who would support such a proposal?  If you disagree with the [...] Read more > >

Stephen Penman Leads Roundtable Discussion

You may know Columbia Business School Professor Stephen Penman as the 14th-most downloaded author on SSRN.  Or you might know him as a Director of the Center for Excellence in Accounting and Security Analysis. Or perhaps as author of Financial Statement Analysis and Security Valuation. More recently, Stephen has been visible as a critic of [...] Read more > >

What Do Standard Setters Optimize?

It is the rare academic article that explicitly considers the objective function of the regulator.  William Bratton is a law professor from Georgetown who takes exactly this focus, and will joins us at the FASRI Roundtable on Wednesday, October 14th at 11am ET to lead us through the thicket of political pressures and machinations that [...] Read more > >

The Asset-Liability Approach: Primacy does not mean Priority

By now, most academics with an interest in standard setting are aware that the FASB and IASB view assets and liabilities as ‘primary’ elements of financial statements, from which income is derived.  However, it is all too easy to see primacy as indicating importance, which I suspect Kothari, Ramanna and Skinner have done in their [...] Read more > >