Professional judgment in financial reporting

In my technical accounting research class and in recent consulting work, I often have been reminded of the need for reasoned judgment in our profession. With the general move toward more objectives-based standards (using the SEC parlance), the need for professional judgment only will increase.  Recognizing the need to teach and understand what professional judgment [...] Read more > >

Leisenring: IFRS 9 Abuse “Inevitable”

Somehow I ended up on the mailing list of Risk.Net, which hails itself as “The world’s leading monthly magazine dedicated to the risk management and derivatives industries.”  In this week’s top story, headlined “Abuse of revised IFRS standards “inevitable” – IASB’s Leisenring“, Jim is quoted as expressing concern about using management intent to determine how [...] Read more > >

Round Table Discussion: Jim Leisenring, IASB Board Member

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 > >

Happy New Year (in Principle)

I hope everyone is refreshed and ready for the new year — and a challenging one it will be for standard setters, with the convergence deadlines rapidly approaching.  To get you started, here are some thoughts on Principles vs. Rules, from Paul Miller and Paul Bahnson, academics who have a regular column (The Spirit of [...] Read more > >

Measuring Value-Added as a Revenue Recognition Approach

I’ve been thinking about something Jeff Wilks said during this week’s FASRI Roundtable and something that occurred to me during the conference.  In short, it is the notion that it might be useful to consider perspectives other than the customer consideration model for revenue recognition.  (Forgive me, Jeff, if I misunderstood your comments Wednesday, and of [...] 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 > >

Leasing: Is it a Good or a Service?

We have already had a couple great posts on the FASB/IASB Financial Reporting Issues Conference by Ray and Rob.  I’d like to add a comment on something that struck me over the weekend. One of the important issues in revenue recognition is the question of whether a company is providing a good or service in [...] Read more > >

Business Models, Intent and Revenue Recognition

Are you comfortable with allowing management to choose whether to recognize unrealized gains or losses based on management’s intent to hold securities to maturity?  How about basing the timing of revenue recognition on the firm’s business model?  Differences in intent and business models might very well alter what information users find relevant.  However, intent and [...] Read more > >

Anticipation and the Conceptual Framework

One issue that came up repeatedly for me at this weekend’s FASB-IASB reporting issues conference was that of the apparent clash between the objective to provide relevant information through financial reports and the objective to maintain consistency with the conceptual framework’s definitions of assets and liabilities. An example illustrates the nature of the problem: consider [...] Read more > >

Round Table: Funding Opportunities for Research on Revenue Recognition

As posted here, FASRI is issuing a call for research consultants to conduct revenue recognition studies.  This call is a little different from the usual ‘call for proposals’ because applicants must be willing to work closely with FASRI and FASB staff to identify research topics that will be most helpful in staff and Board deliberations.   [...] Read more > >