FAF Board of Trustees Approves Private Company Council

A news release today announced that the FAF Board of Trustees has approved a Private Company Council (PCC) that will have two principal responsibilities.  First, they will determine whether exceptions or modifications to GAAP are necessary to meet private company financial statement users.  Second, the PCC will serve as the primary advisory body to the FASB [...] Read more > >

Reading Between the Convergence Lines

In prepping a class session on convergence, I found a March 2012 speech by Meredith Cross, the SEC’s Director of Corp Fin, that raised an interesting possibility.  A select group of foreign companies that cross-list their securities in the U.S. and prepare their financial statements using IFRS as issued by the IASB might have to [...] Read more > >

Register to Participate in the FAF’s Review of SFAS 131

In case you missed it, the FAF has made a public call seeking survey participants for their post-implementation review (PIR) of SFAS No. 131.  The survey is not quite available yet, but the call is for people, including academics, to register for the survey.  In the FAF’s inaugural PIR on FIN 48, academics did not [...] Read more > >

Disclosure Framework Update

The FASB’s Disclosure Framework team is close to issuing an Invitation to Comment, which will present the staff’s thinking on this important project.  While this is a FASB only project, there are several other bodies that are watching the project closely, including the IASB and SEC.  This post provides a brief update on the project [...] Read more > >

Auditor Judgment Frameworks; or Principles-Based versus Rules-Based Accounting Standards Part II

A recent paper by Backof, Bamber, and Carpenter (2011, International Financial Reporting Standards and Aggressive Reporting: An Investigation of Proposed Auditor Judgment Guidance) investigates auditors’ judgments under IFRS and US GAAP.  The authors conduct an experiment where 200 auditors from a Big 4 accounting firm were asked whether they agree with management’s preferred accounting methods [...] Read more > >

FASRI Roundtable: XBRL

In my last FASRI blog post, I stated that XBRL represents a significant paradigm shift in financial reporting and analysis from paper/PDF based financial statements to electronic data that can be manipulated to meet users’ needs.  This paradigm shift has implications for not only what research questions we might ask (the subject of the prior [...] Read more > >

Does XBRL Make Financial Statement Presentation Issues Irrelevant?

On December 17, 2008, the U.S. Securities and Exchange Commission (SEC) required firms to use eXtensible Business Reporting Language (XBRL) when issuing financial statements to regulators or posting financial statements to their corporate websites (SEC 2008).  This mandate represents a significant paradigm shift in the financial disclosure environment.  Financial statement users potentially benefit from a) [...] Read more > >

Principles-Based versus Rules-Based Accounting Standards

If you were to pose a question to any undergraduate accounting major with familiarity about IFRS as to what is the primary distinction between IFRS and U.S. GAAP, you’d probably get the response that IFRS is principles based and U.S. GAAP is rules based.  It’s a notion that was promoted by former IASB Chairman Sir [...] Read more > >

Fair Values and Private Companies

In the most recent The Accounting Review (Vol. 87, No. 2), Caskey and Hughes examine how alternative fair value (FV) measures affect the ability of debt covenants to mitigate suboptimal investment decisions.  A primary result from the paper is that the FASB’s “highest and best use” measure of fair value is dominated by more conservative [...] Read more > >

Accounting for Asset Securitizations

The most recent issue of The Accounting Review (March 2012) contains a study by Barth, Ormazabal, and Taylor that examines the association between two measures of credit risk and asset securitizations.  I found the study to be interesting and relevant to standard setters. Accounting for asset securitizations is controversial, and critics have charged that GAAP [...] Read more > >

Why is the Bank Lobby Against FV-NI?

Financial institutions complained loudly two years ago when the FASB issued a proposed standard on financial instruments that would require fair value reporting for loans with changes in FV being recognized in earnings (FV-NI).  I would describe the bases for these complaints falling into two broad categories.  The first category is the notion that it [...] Read more > >

CONGRESSIONAL HEARING ON ACCOUNTING AND AUDITING OVERSIGHT (More on Costs and Benefits)

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 > >

FASB Research Fellow Selected for 2012-13

The Financial Accounting Standards Board (FASB) is pleased to announce that Jeffrey Doyle, George S. Eccles Chair in Capital Markets Research at Utah State University, has accepted the FASB 2012-2013 Research Fellowship, which will begin in July.  Jef earned his Ph.D. at University of Michigan and previously served on the faculty at University at Utah [...] Read more > >

JOBS Act Carries Implications for FASB/PCAOB Independence

The Jumpstart Our Business Startups (JOBS) Act is grabbing media headlines recently.  Advocates for the bill suggest it will stimulate IPOs by removing burdensome regulations.  Critics charge that the regulations are there for a reason, and removing them will set the stage for history to repeat itself.  Most of the attention has been on how [...] Read more > >

FASB’s Response to the Post-Implementation Review of FIN 48

In a letter dated March 20, Leslie Seidman prefaces the FASB’s formal response to the inaugural Post-Implementation Review conducted by the Financial Accounting Foundation on FIN 48, which was released in January.  The 5-page FASB response summarizes some key aspects that were deliberated during the process of promulgating FIN 48 and offers interesting context surrounding [...] Read more > >

FASB to Host Video Webcast on 2012 Priorities

On Monday, March 12, Leslie Seidman, Chairman of the FASB, will host a 1-hour video webcast to discuss the Board’s priorities for 2012.  The webcast features a discussion of several agenda projects, including nonprofit accounting and private company initiatives.  Viewers will also have the opportunity to submit questions by email during the live webcast. The webcast [...] Read more > >

Update on the Leases Project

When I first arrived at the FASB, my expectation was that the Leases project was winding down and we might have a final standard before I left.  This was also what the FASB website indicated.  How things have changed!  After an Education Session a couple of weeks ago and the joint IASB/FASB Board Meetings this [...] Read more > >

Are LIFO’s Days Numbered?

The LIFO inventory valuation method is a big difference between IFRS and US GAAP that standard setters have left untouched.  I have heard many people question what will become of LIFO if the SEC decides to go forward with some kind of IFRS implementation in the US.  Perhaps this would be the first “carve-in” for US [...] Read more > >

Summary of Important Changes to Revenue Recognition

The Revenue Recognition project has been going on now for, what, nearly a decade?  After extensive deliberations and outreach by the Boards, we might actually see a final standard roll out sometime this year.  Given the fundamental nature of the topic, it is likely to have a substantial impact on how most of us teach.  The [...] Read more > >

FAF Announces New Reviews of Standards

In case you missed the press release yesterday and the FASRI Roundtables a couple weeks ago, the Financial Accounting Foundation is beginning post-implementation reviews on two standards; SFAS 141R on Business Combinations, and SFAS 131 on Segment Disclosures.  The FAF issued its inaugural post-implementation review report a few weeks ago on FIN 48.  The report was generally positive [...] Read more > >