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 > >


I am struggling with the FASB’s treatment of precision and where it belongs in the conceptual framework. I believe that they are now thinking it affects relevance. They are clear that it is not part of their definition of reliability. The latter is not, in my own opinion, an issue. But I’m struggling with it [...] Read more > >

FASRI Roundtable: Other Comprehensive Income

The current model of reporting other comprehensive income outside of earnings is controversial and receiving attention from standard setters.  The FASB/IASB Issues Conference this past December spent a significant amount of time on this issue.  Specifically, the primary issues are 1) presentation of OCI in the financial statements (which is the topic of the recently [...] Read more > >

FASRI Roundtable: Post-Implementation Review

On January 24 and 25, the FASRI will host a Roundtable on the FAF’s Post-Implementation Review.  In an effort to more effectively oversee the FASB and GASB activities and improve the standard-setting process, the Financial Accounting Foundation (FAF) announced about one year ago a new process to review promulgated standards by these Boards.  Referred to [...] Read more > >

By 4-3 Vote, FASB Decides not to Require Managers to Make Going-Concern Assessment

The FASB’s project on Risks and Uncertainties (formerly “Going Concern”) has been full of twists and turns.  The most recent decision on this project was made this past Wednesday when the Board voted 4-3 against a proposal that would switch the responsibility of assessing the going concern assumption from auditors to managers.  To illustrate how [...] 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 > >

FARS Midyear Meeting

The FARS midyear meeting starts tomorrow.  Some blog readers are probably at the airport or in the air as I type.  The preliminary program is available here.  Looks like standard setting issues will once again be prominent at the meeting.  The plenary session Friday afternoon is titled “Current Topics in Standard Setting”, with panelists Jim [...] Read more > >

FASRI Roundtable: Proposed Standard on Revenue Recognition

Click here to view the video recording of this Roundtable   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 [...] Read more > >

Financial Statements for Financial Institutions Just Got Longer

At the same time when the FASB is trying to address the issue of disclosure overload, a failed attempt to converge standards has resulted in the FASB and IASB issuing new requirements for increased disclosures related to net positions on various contracts.  US GAAP allows companies to present derivatives on a net basis when they [...] Read more > >

Upcoming FASRI Roundtables

Finals are over and the holidays are here – great time of the year.  As I anticipate FASRI activities for next year, I’m looking forward to the next batch of Roundtables.  This past semester, we had an opportunity to meet several new FASB Board Members, Hal Schroeder, Russell Golden, and Daryl Buck, as they each [...] Read more > >

Comment Letters to FASB on Proposal to Defer Effective Date of OCI Reclassification Presentation

ASU 2011-05, which was issued in June, required that firms report comprehensive income within a performance statement and prominently display on the face of the income statement the affected line items from recycling.  It was this latter requirement that caused heartburn for some preparers, and as Bob Lipe blogged here, the FASB exposed a proposal [...] Read more > >

More on International Convergence

Bob Lipe blogged last week on the SEC’s release of two documents related to their exploration of whether/how to integrate IFRS into US GAAP.  Since the release of those documents, the SEC, IASB, and FASB have all made public statements that provide insights as to where regulators and standard-setters sit on this issue.  The least [...] Read more > >

What is the Meaning of “Substantial Doubt”?

Many terms in accounting refer to a probability assessment.  The Contingencies Topic in the FASB’s Codification uses the terms probable, reasonably possible, and remote to describe the likelihood of events occurring that will confirm a loss contingency.   The phrase more likely than not is used in several topics, including, goodwill impairment and deferred tax assets, [...] Read more > >

SEC Releases IFRS Studies

A friend pointed me to an Accounting Today article that reports the release of SEC documents exploring IFRS.  One of them compares IFRS and GAAP for most transactions (some active MOU projects are omitted).  Another assesses how IFRS is being applied in practice.  I have not had the chance to study these yet, but  here [...] Read more > >

Pragmatics, Implicature and The Efficiency of Elevated Disclosure

Pragmatics, Implicature and The Efficiency of Elevated Disclosure, an article now posted on SSRN that sprang from my thoughts about the FASB’s Disclosure Framework Project, which I discussed in my presentation on the Theories of Disclosure panel at the 2011 AAA Meetings in Denver. Here is the abstract: This paper uses a Pragmatic theory of [...] Read more > >

FAF Recommends Condorsement to SEC

comment letter to the Securities and Exchange Commission recommending that the SEC adopt a condorsement approach to incorporate IFRS into the US financial reporting system. The approach recommended by the FAF is somewhat different than the model of condorsement previously described by the SEC, but is similar in that the FASB would consult with the [...] Read more > >

FASB & IASB Propose New Revenue Recognition Standard

official news release, this new exposure draft addresses concerns raised in the 1000+ comment letters received in response to the first exposure draft. In particular, this exposure draft: adds guidance on how to determine when a good or service is transferred over time; simplifies the proposals on warranties; simplifies how an entity would determine a [...] Read more > >

Financial Instruments

The Boards have divided the project into three areas: 1) classification and measurement, 2) impairment, and 3) hedging.  The FASB will probably re-expose their decisions on classification and measurement in early 2012; impairments will probably be re-exposed later in 2012.  With respect to hedging, there is still too much work to be done to predict [...] Read more > >

Neat case

I don't know if any of you saw this, but it is a great potential case. First, here's a story on Green Mountain Coffee Roasters in Barrons Click here. Second, here’s a link to the downloadable 110 slide presentation that the analyst (who is short the stock) did. It is amazing to watch the detailed [...] Read more > >