Peeling away financial reporting issues one layer at a time

“Going Public” is More than a Memoir by an SEC Staffer — Which is Unfortunate

There is more to the securities laws and their administration by the SEC than just the ’33 and ’34 Acts.  The Investment [Read More...]

Double-Entry Accounting in Modern Times

My Shareholder Oriented Financial Accounting (S-OFA) Standards will require that debits equal credits.

Duh.  But if I am truly going to start with a clean sheet of paper, then I am compelled [Read More...]

Non-Voting Shares are in Vogue: Do (Lousy) Accounting Rules Play a Part?

I’m starting a company and I want you to invest.  I will put up $100 of my money for $10 million of yours.  I will own 100 shares of voting stock, and you will [Read More...]

The Asset Impairment Song and Dance (Part 2 of 2)

My latest post was about general problems with asset “impairment” accounting —  its absurdity, high cost and dubious information value.  And I haven’t even begun to hone in on the wurst part: goodwill impairment.

It is [Read More...]

The Asset “Impairment“ Song and Dance (Part 1 of 2)

Two recent news items have made this an opportune time for a post — actually, two posts —  about the accounting for the “impairment” of an asset.

The SEC is considering whether Exxon violated the [Read More...]

Introducing ‘Shareholder-Oriented Financial Accounting’

Last December, I announced that I have started to write a book that would propose a very different basis for financial accounting by public companies.  I’m calling it ‘Shareholder-Oriented Financial Accounting’ (S-OFA), and this [Read More...]

Revenue by (Logical) Deduction

It seems there is always good reason to write a post about revenue recognition.  I can even envisage an entire blog on  the FASB’s new standard (ASC 606). It could go on for years without [Read More...]

Could Wells Fargo be the Next Big MD&A Enforcement Action?

The question occurred to me after reading Francine McKenna’s coverage of Senate hearing testimony by Wells Fargo’s CEO about the nearly 2 million unauthorized credit card and savings account openings.  I don’t know if the [Read More...]

More Not to Like about Deferred Taxes: The Foreign Earnings Loophole

A seasoned accountant and regular reader of my blog wrote that, until my last post, he had seen little discussion of the potential to manage the effective tax rate upwards. He has, however, [Read More...]

Of What Use is Deferred Tax Expense to Financial Analysts?

Interperiod tax allocation has been required since the 1950s, soon after Congress permitted tax deductions based on accelerated depreciation of long-lived assets.  History indicates that the accounting standard setters who pushed for [Read More...]

Deferred Taxes and Tax Reform: Is a Big (Fictional) Accounting Gain in the Future?

I read today that Congress is likely to consider corporate tax reforms that would reduce the statutory income tax rate from the current 35% to as little as 15%.  The lower income tax [Read More...]

Toward a More Appropriate Objective for the FASB (and IASB)

I hoped that my previous post would make a compelling argument for why a more focused objective for the FASB could lead to standards that would better serve the public interest. Some readers liked it; [Read More...]

Why the FASB Won’t Define “Financial Accounting”*

The FASB has been prolific by any measure. The codification of authoritative GAAP alone is almost 8,000 pages for goodness sake. Believe it or not, that’s about twice as wordy as the [Read More...]

The Parable of the Good Big-Four-Congressman

U.S. Representative Scott Garrett (Republican, New Jersey) was first elected to Congress in 2002, months after the passage of the Sarbanes-Oxley Act.  A couple of weeks ago, he introduced legislation that would amend S-OX [Read More...]

Is “Accounting” Really Accounting?

I wonder why so little is made of the fact that key technical terms in U.S. financial reporting are misleading perversions of plain English?  As a sampling, consider these, which I have written about in [Read More...]