Peeling away financial reporting issues one layer at a time

Post the Convergence Mania: The New Revenue Recognition Standard Will Do Much More Harm than Good

A journey through recent accounting time…

It’s 2002

The Accounting Establishment declares that convergence of FASB and IASB rules is “inevitable.”  At the top of a very long convergence to-do list is revenue recognition.  It so [Read More...]

On Its “Materiality” Proposals, Will the FASB Heed the Handwriting on the Web?

As I described in a previous post the FASB has two related proposals on the table related to materiality and financial statement notes:

An amendment to Concepts Statement No. 8 to replace its ersatz definition [Read More...]

Long on “The Big Short”

With the Oscars nigh upon us, I should tell you that I fell short of my goal to see The Big Short.   How did subprime mortgages morph into weapons of [Read More...]

Classification of Debt Prepayment Costs in the Statement of Cash Flows: What was the EITF Thinking?

I have been teaching undergraduate “Accounting Theory” for the past three years.  For reasons that I will explain below, I choose to begin the course by exploring differences between accrual accounting and cash flows; and relatedly, [Read More...]

FASB Fiddles (Again) While Banks Burn (Us Again)

While on the cusp of one more financial crisis, the time has come to ask yet again: What is the FASB accomplishing that will fix the deeply flawed accounting by banks for loan losses? Answer: nada, nichts, bupkis, absolutely nothing.

Instead, [Read More...]

Reining in “Non-GAAP Financial Measures”

At the recent AICPA-sponsored mega-conference on SEC and PCAOB developments (see KPMG’s summary, here), the SEC staff, and even its chair, devoted a significant amount of bandwidth to non-GAAP measures of financial performance.  Some [Read More...]

“Fairly Presented” in the Auditor’s Report—Puffery or Principle?

From the preface of Political Standards: Corporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy:

In subtle but significant ways, our corporate accounting system has been captured…. [Read More...]

FASB’s Proposed Materiality “Clarifications” are Backfiring

Something must have happened between my post criticizing the FASB’s proposals to reduce materiality to a legal exercise and last week’s meeting of the SEC Investor Advisory Committee.  Just prior to the [Read More...]

Camfferman and Zeff on the IASB

This is my third post for today.

About 20 years ago (it’s been that long already!), I had a fairly regular gig traveling to Europe and Dubai to make presentations about SEC disclosure requirements that [Read More...]

Materiality: The FASB is Shrinking the Envelope

This is the second of three posts today.  In this one, I want to talk about materiality — in general, and the recent proposals issued by the FASB. (The first post, a related one, [Read More...]

On Reconciliations and Financial Analysis

I have three things to write about today, which for the sake of length and ease of future reference, I will publish as three separate posts.  This is the first one.  

The FASB has [Read More...]

The Earnings Management is Hidden in the Details

With inspiration and encouragement from the John Hughes IFRS Blog, this post is a partial recycling from 2010 of Merrily We Roll Along — Forward and Up.   I had observed way back [Read More...]

Hoogervorst Hokum Re Historic Cost

After years of trying to work with the FASB on a revised conceptual framework, the IASB finally decided to abandon the goal of a fully converged framework and to finish a document for its [Read More...]

“The Bankers’ New Clothes” is NOT a Fable

There are two types of people in the world: those who like to divide people into two types, and those who don’t.

Too simple? OK, try this one: some people find taxonomies very helpful; and others, not [Read More...]

How GAAP and IFRS Succeed in Overstating Bank Capital without Really Trying

As I stated in my post on ASU 2015-03, the accounting for debt issue costs is relatively small potatoes. The point was to illustrate that the FASB’s so-called “simplification initiative” was driven [Read More...]