Financial Accounting Standards Research Initiative

On June 16, 2011, the IASB released its amendments to IAS 19 (Employee Benefits).  David Zion, accounting research analyst for Credit Suisse, reviews the implications of the amendments and concludes that “now it’s FASB’s turn” to “fix” pension accounting. In fact, he recommends that the FASB simply expose the new IASB rules, as is, to FASB [...] Read more > >

I told a brand new PhD student here at The University of Texas, Greg Capps, about my regular blogging on the FASB disclosure project. He had an interesting story to tell me. He said… “In my auditing days, perhaps the worst thing we did to a client was hand them the 250-page GAAP Disclosure [...] Read more > >

I got an email alerting me to an interesting news item from Bloomberg.  The story discusses how some Chinese firms become publicly traded in the U.S. but would not qualify to be listed in Hong Kong.  The story mentions that 98 Chinese companies used “reverse-merger” to get listed in the U.S.  “The MSCI China Index [...] Read more > >

I have started to think recently quite a bit about firm’s own credit risk and I think it is an area research has the potential to be helpful to standard setting. Barth Hodder and Stubben (TAR 2008) investigate the association between equity returns and credit risk changes. Consistent with Merton (1974), the relation between credit [...] Read more > >

…or so says The Economist in this article. While I generally think highly of the The Economist, this article contains one of my pet peeves, which is a loose discussion of fair value. In particular, the article states that “In 2009, under its previous chairman, Bob Herz, FASB narrowly voted 3-2 that all assets should be [...] Read more > >

The IASB/FASB recently affirmed an earlier decision not to rewrite standards on inventory cost accounting as part of its revenue recognition project.  Other than the limited guidance already covered in the proposed new standard (on topics such as setup costs for service contracts, precontract costs, and inventory of a service provider), the boards have left [...] Read more > >

Not only will I be blogging about the Unit of Account / Disaggregation / Net vs. Gross / Whatever Words you Use, but I also will be posting about the FASB’s new disclosure project. So, what do you say when you teach your classes?? Probably what I say “oh yes and there are [...] Read more > >

The FASB just issued an accounting standards update concerning the presentation of comprehensive income.  Under prior guidance, companies can report comprehensive income in three ways.  The update eliminates one option – reporting the details of other comprehensive income in the statement of changes in stockholders’ equity.  The update continues to allow reporting in either a [...] Read more > >

No I am not going to do a book review on financial instruments. This is an interesting concept being considered as part of the financial instrument project. As many of you already know, the FASB is attempting to develop a single impairment model for financial instruments. In January, the Boards issued a supplementary document that [...] Read more > >

Talk to an academic my age or older, and right along with “get off my lawn” you’ll hear comments like “kids these days never read anything published more than five years ago.”  This is often true in research (outside of doctoral seminars), but is even more true about standard setting. After all, how could something [...] Read more > >

In 1957, the Princeton Press published Milton Friedman’s famous book, A Theory of the Consumption Function.  An interesting assumption underlying the theory is that “the transitory components of consumption and income can be taken to be uncorrelated with the corresponding permanent components and with each, other.” One of the key inferences is that permanent (smoothed) consumption [...] Read more > >

In a press release issued today, the FASB and IASB announced their decision to re-expose the revenue recognition proposal. In their own words: It was the unanimous view of the boards that while there was no formal due process requirement to re-expose the proposals it was appropriate to go beyond established due process given the importance [...] Read more > >

I just got my copy of the FINANCIAL INSTRUMENTS: A comprehensive guide to accounting and reporting -2011 CCH publication, authored by Rosemarie Sangiuolo, Scott Taub, and Leslie Seidman. You might recall that last year I was struggling with the new accounting for convertibles and Scott Taub said he was revising the convertible instrument in this [...] Read more > >

Grant Thornton recently issued a white paper that reports results of a survey (318 respondents) they conducted with some CFOs from both private and public companies (authors of the paper are John Hepp and Meredith Vogel). Notwithstanding the usual caveats that come with survey data, there are some interesting (and sometimes surprising) results reported in [...] Read more > >

A search of the FASB’s entire codification of accounting standards reveals only 8 references to the term “performance obligation,” with no definition.  The term does not appear in any current concepts statements.  Given it’s prominence in the exposure draft on revenue recognition, I expect that the term will become ubiquitous as the FASB-IASB convergence process [...] Read more > >

In addition to their upcoming webcast on nonpublic entities (see this post), the FASB is also hosting a webcast on how to use the XBRL 2011 US GAAP Financial Reporting Taxonomy. The webcast will take place on Wednesday, June 22, 2011 from 1:00–2:00 p.m. EDT. Details available here. Read more > >

FASB will be conducting a webinar on Friday 6/17 at 1:00pm ET to discuss reporting topics of interest to nonpublic entities. It should be a great session, especially for those of you interested in Big GAAP/Small GAAP issues. Click here for more details. Read more > >

I read an interesting CFO.com article today titled All in the Timing. The article talks about the struggles some U.S. firms are facing as a result of the disasters in Japan. The firms relied on just-in-time (JIT) inventory systems and are now scrambling to find substitute suppliers. Some firms have had to go as far [...] Read more > >

I’ll be regularly blogging on unit of account / disaggregation / net vs. gross etc. Recall a prior post where I mentioned how my head spins when I think of these concepts that are not clearly defined. Perhaps through this blog, we can make some headway on keeping these concepts distinct. Today’s [...] Read more > >

I just read an insightful, if not provocative, paper on the shortcomings of a potential IFRS monopoly. The paper entitled, “IFRS Monopoly: The Pied Piper of Financial Reporting,” is written by Shyam Sunder of Yale University, and I recommend it to anyone who wants to form a balanced opinion about whether the US should adopt [...] Read more > >