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Columns By Former SEC Chief Accountant Scott Taub

The former deputy chief accountant of the Securities and Exchange Commission, Scott Taub spent more than four years at the SEC, including a year as acting chief accountant. In his tenure there, he played a key role in the Commission's implementation of the accounting reforms under the landmark Sarbanes-Oxley Act. He is an observer on FASB's Emerging Issues Task Force, and chair of the accounting and disclosure standing committee of the International Organization of Securities Commissions. Some of Taub's most recent columns for Compliance Week are below:

Reporting Problems Old and New That Trouble Companies

March 25, 2014

While there weren't any major new accounting standards to incorporate this reporting season, some familiar issues continued to cause headaches for companies, including revenue recognition, taxes, and distinguishing between debt and equity. Also problematic is a recent change causing auditors to conduct more detailed tests for errors. Inside, Columnist Scott Taub looks at difficult reporting areas.
 

With Convergence Over for Now, What's Next?

January 28, 2014

For most of the past decade, the quest for global accounting standards has captured the attention of the U.S. financial reporting community. Efforts by the Financial Accounting Standards Board and the International Accounting Standards Board to converge standards, however, appear to be drawing to a close. Inside, columnist Scott Taub looks at what's next for accounting in the post-convergence era.
 

Private Company Accounting: The Good, the Bad, and the Ugly

November 26, 2013

The Private Company Council, launched last year to identify areas where Generally Accepted Accounting Principles may be simplified for private companies, has issued its first four proposals, including changes to accounting for hedging, goodwill, intangible assets, and variable interest entity. Inside, columnist Scott Taub casts a critical eye on the proposals and finds a few ideas to like along with plenty of concerns.
 

Accounting Should Follow, Not Drive, Decision Making

September 03, 2013

Accounting is designed to show the effects of business transactions, not to decide which transactions are desirable. When the accounting favors a particular transaction over others in ways that don't reflect economic differences, it has failed. Inside, columnist Scott Taub looks at some instances where accounting standards essentially subsidize one form of transaction or structure, including past examples that have been eliminated and some that still exist today.
 

How the SEC's Authority Helps Resolve Accounting Issues

July 30, 2013

The Securities and Exchange Commission's dual role as the ultimate overseer of accounting rules and the enforcer of those roles gives it the ability to quickly resolve accounting issues. Inside, Columnist Scott Taub compares how the SEC resolved some examples of accounting problems with how they were handled abroad.
 

Why the Current Proposal on Loan-Loss Accounting Is Flawed

May 21, 2013

Late last year the Financial Accounting Standards Board issued its second proposal on accounting for loan losses, which would require companies to recognize all expected losses for every financial instrument not carried at fair value. Inside, Columnist Scott Taub provides his take on the proposal, which he says would abandon the long-established idea of recording things as they occur, not before or after, and he examines some solutions for the current problems of loan-loss accounting.
 

One for All or All for One? The Unit-of-Account Problem

March 26, 2013

One of the issues that adds greatly to the complexity of accounting is the concept known as "unit of account." The question is whether to make accounting decisions item by item, or based upon some grouping of items. Inside, Columnist Scott Taub surveys the unit-of-account issue and calls for some consistency and common principles in applying unit of account in accounting standards.
 

Taking Measure of a Multitude of Measures

January 29, 2013

Sure, accounting can be complex, but after considering all the different measurement models accountants need to apply, the system seems downright Byzantine. It seems as if there are almost as many measurement attributes as there are things to measure. Inside, Columnist Scott Taub highlights several models and their variants as he argues for a simpler—or at least smaller—group of accounting measures.
 

The State of Accounting Standard Setting

November 27, 2012

Financial reporting executives are constantly on edge about the pace of change in accounting standard setting—too much, too fast, too often. Yet the Financial Accounting Standards Board issued few accounting standards in 2012 that affected most companies. Inside, Scott Taub takes a look at the state of accounting standard setting during what appears to be a lull in the action.
 

How Congress Is Misusing the Reporting System

September 25, 2012

Congress has passed legislation that uses the corporate reporting process to fight violence in Central Africa, to identify the misuse of funds by governments of resource-rich countries, and to spur job growth here at home. Inside, Columnist Scott Taub explains why financial statements are a poor place to address these causes, regardless of how noble they may be.
 

Are Reduced Disclosure Requirements a Possibility?

July 31, 2012

The Financial Accounting Standards Board is working on a project to improve the effectiveness of disclosures in notes to financial statements, titled "Disclosure Framework." It could also have the effect of reducing disclosure overload. Inside, Columnist Scott Taub examines what he says could be the best chance yet to streamline disclosure requirements.
 

Restatements: Let Me Count the Ways

May 30, 2012

When a financial reporting error is identified, companies generally need to decide if a restatement of prior periods is in order, or if correcting it in the current period will suffice. Yet there are multiple ways to correct an error through a restatement. Inside, Columnist Scott Taub looks at the many different types of restatements and offers his views on when each is appropriate.
 

How to Simplify Financial Reports: Be Reasonable

March 27, 2012

Standard setting and rulemaking efforts are underway to relax some of the accounting requirements that seem unnecessarily burdensome. But some of the complexity is the profession's own doing. Inside, Columnist Scott Taub calls for a more reasonable approach to interpreting accounting rules and avoiding unneeded complexity.
 

Preparing Your 2011 Financial Reports

January 02, 2012

Happy New Year—now get to work writing your company's annual report. That task requires all your skill at understanding useful and correct financial disclosure, so this week, Columnist Scott Taub offers his 10 tips on what makes for useful disclosure. And those tips include, he says, the idea that sometimes saying less is more helpful to investors. His full column is inside.
 

Reforming the Audit Firms ... Again

November 29, 2011

It's been roughly a decade since a spate of financial frauds such as Enron served as catalysts for the restructuring of the audit profession as we knew it. Now a new round of proposals for significant change is on the table. Inside, Columnist Scott Taub examines the proposed reforms and considers whether they will lead to higher quality audits or just more cost and complexity.
 

Why Support for Global Accounting Standards Is Waning

September 27, 2011

Support in the United States for moving to a single set of global accounting standards appears to be ebbing. Convergence projects remain unfinished, and questions linger—justified or not—about the effectiveness of the International Accounting Standards Board. These developments have left Columnist Scott Taub discouraged about the outlook for a single set of global accounting standards. And that's unfortunate, he says.
 

Don't Create 'Little GAAP' for the Wrong Reasons

July 26, 2011

Accounting rulemakers are considering the creation of a new board to weigh separate accounting standards for private companies and create them as necessary. Inside, Columnist Scott Taub argues that end users, not costs, should be the focus of the effort, and that the Financial Accounting Foundation is not the right group to lead it.
 

Accounting Rules, Bank Oversight Square Off

May 24, 2011

Some regulators want to use accounting rules to create financial stability in the banking sector, but let's not forget that the point of accounting rules is transparency—not necessarily stability. Inside, Columnist Scott Taub looks at where the objectives of accounting rules and financial stability can conflict, and why banking regulators should consider other tools to encourage stability.
 

The Implications of Predicting Loan Loss

March 29, 2011

The Financial Accounting Standards Board's recent proposal on impaired loans has the stated objective of recognizing losses before they occur. Columnist Scott Taub argues that the proposal runs counter to traditional accounting principles and would result in a lack of discipline. Inside, he offers an alternative method.
 

Meaningful Loss Contingency Disclosure Could Head Off a FASB Intervention

January 25, 2011

Most companies are cheering the Financial Accounting Standards Board's decision to put plans to improve disclosure of loss contingencies on hold. But, as Columnist Scott Taub warns, unless companies improve disclosures in this area, FASB will be back working on a standards update before long.
 

Accounting's Wild Times of 2010; 2011 Predictions

November 30, 2010

2010 has been a busy year for the accounting world, as the Financial Accounting Standards Board continues to issue a slew of new rulemaking proposals. Next year is shaping up to be just as eventful. Inside, Columnist Scott Taub unpacks the latest accounting developments and provides insights on what they mean for the coming year.
 

Make All Voices Count in Debates on Accounting

September 28, 2010

Among the most enjoyable parts of the six years I spent at the Securities and Exchange Commission were the intelligent discussions on how to resolve difficult financial reporting issues. Although many people think of accounting as a boring profession with little conflict, those of us in the profession know that important issues almost always result in mixed views. Good debates on these issues repeatedly have resulted in better reporting, whether the topic is one company’s accounting for one transaction, what principles should be embedded in a new accounting standard, or how to revise SEC rules and regulations.
 

Helping Yourself: Send FASB Useful Comment Letters

July 27, 2010

My first column this year discussed a few hopes for 2010. One of them happened in February, when the Securities and Exchange Commission clarified its thinking about International Financial Reporting Standards. I’m happy to report that another happened in June, as the Financial Accounting Standards Board issued several exposure drafts as part of its big push to improve and converge U.S. Generally Accepted Accounting Principles and IFRS, and announced a slower timetable for completion of the 15 or so projects on its agenda.
 

Getting to IFRS With Wisdom, Not Expediency

May 25, 2010

In my first column this year, I wrote that I hoped the Securities and Exchange Commission would soon give us some clarity on its thinking in regard to moving U.S. reporting companies to International Financial Reporting Standards to calm some of the anxiety regarding that potential move. My wish was fulfilled in February when the SEC issued its “Commission Statement in Support of Convergence and Global Accounting Standards.”
 

Evolving Answers on Good Accounting Policy

March 30, 2010

One of my partners at Financial Reporting Advisors is fond of saying about accounting, “The questions never change.” He’s been watching accounting policy for a lot longer than I have, but even in my relatively brief time, I’ve seen enough to know he’s right.
 

Remaining Hopeful for Governance in 2010

January 26, 2010

For the past 18 months or so, almost everything in the financial reporting world seems to have been about the credit crisis and recession. The focus has been on whether accounting standards should be changed, whether impairments were being recorded quickly enough, whether risk disclosures were sufficient, and so forth.
 

A Bundle of Concerns on New Revenue Rules

November 24, 2009

I recently wrote about the opportunities and challenges that the new Financial Accounting Standards Nos. 166 and 167 bring to U.S. financial reporting. My fear was that the new standards won’t help improve financial reporting not because of shortcomings in the standards themselves, but because experience suggests that implementation of the standards might not go the way we all would like.
 

How to Handle the Five Habits of Difficult Auditors

September 29, 2009

In previous columns here, I’ve often talked about how to handle difficult accounting issues. I have not, however, talked about how to handle auditor issues. It’s time that I do.
 

Farewell to the QSPE; FASB Makes a Fresh Start

July 28, 2009

With the Financial Accounting Standards Board’s recent publication of standards No. 166, Accounting for Transfers of Financial Assets, and No. 167, Amendments to FASB Interpretation No. 46(R), the end of the qualified special purpose entity is, thankfully, close at hand. We should all celebrate.
 

Finding Firmer Ground for Your Accounting Ideas

May 27, 2009

The Commissioners and staff at the Securities and Exchange Commission are great people: smart, talented, personable. Nonetheless, I would guess that most Compliance Week readers would like to interact with them as little as possible. I'm here to help.
 

IFRS & U.S. GAAP: Where Do We Stand?

March 31, 2009

In late 2007, I predicted in a presentation that U.S. companies would be using International Financial Reporting Standards as their basis of accounting within 10 years. In the Q&A that followed, two audience members said my prediction was ridiculous; one said the United States wouldn’t move that quickly, while the other said there was no way it would take so long.
 

Lessons Learned in 2008 That Will Benefit in 2009

January 27, 2009

I think I can safely say most of us are happy to see 2008 recede into history. While the economic crisis of last year was not primarily one of financial reporting, it did expose the shortcomings in our financial reporting structure. That exposure can (and should) lead to future improvements, so in this column I want to reflect on how the painful events of 2008 can propel us forward into a better 2009.
 

Accounting’s Role in the Market Bailout

November 25, 2008

Some of my friends and relatives ask me who to blame for their 401(k) losses, the $700 billion bailout, and the fact that they can’t refinance their mortgage.
 

How the PCAOB Fares After Five Years on the Job

September 30, 2008

It has been more than six years since the Public Company Accounting Oversight Board was created by the Sarbanes-Oxley Act, five years since the Securities and Exchange Commission declared the PCAOB operational, and four years since the PCAOB started its first inspections of registered public accounting firms. The PCAOB’s work, in combination with other changes in the capital markets, has significantly increased confidence in financial statement audits. And the PCAOB board members and staff have shown themselves to be capable, dedicated, and devoted to their important public policy role.
 

Reaching a Fair Settlement on Fair Value

July 29, 2008

In the year I’ve been writing for Compliance Week, one subject I haven’t broached is fair-value accounting. I'm not alone; the Securities and Exchange Commission’s Advisory Committee to Improve Financial Reporting has decided not to touch it either, while offering recommendations on all manner of other nettlesome problems. Nonetheless, the debate continues over fair value versus historical cost accounting. Since I’ve seemingly heard every argument on all sides of this debate, it’s probably time for me to speak up, too.
 

CIFR Reforms: What’s Right, What’s Left Out

May 28, 2008

The Securities and Exchange Commission’s Advisory Committee on Improvements to Financial Reporting has kept itself busy this spring. In February, it issued a progress report that summarized its potential recommendations to simplify financial reporting; in March and May, it held follow-up meetings to discuss those ideas more thoroughly. I’ve already written about CIFR’s recommendation regarding a professional judgment framework, but there are a lot of other interesting potential recommendations that deserve some consideration, too—not just from the members of the committee, but also from Compliance Week readers.
 

Judgment Call: How to Make the Most of CIFR Proposal

March 25, 2008

Financial reporting is much more useful when those preparing the financial statements apply their expertise and judgment in an attempt to reflect the business in the most meaningful way. But in the difficult litigation and regulatory environment that has enveloped the accounting profession most of this decade, many accountants associate applying judgment with playing Russian roulette and would rather follow rules—formal or informal—instead.
 

So You Think You Know the SEC ...

January 29, 2008

The last year since I left the Securities and Exchange Commission has been a real eye-opener for me in lots of ways.
 

The Real Enemy of Financial Reporting: Us

November 27, 2007

In December 2005, while I was Acting Chief Accountant at the Securities and Exchange Commission, SEC Chairman Christopher Cox and I both spoke about reducing the complexity of financial reporting. We weren’t the first to mention this, and we weren’t the last, as the topic has been continually discussed in the two years since. In my current job, at least several times a week, either I remark or my client remarks about how complicated the accounting is. The responses to the Financial Accounting Standards Board’s annual survey of constituents about its agenda contain repeated requests to simplify accounting standards. FASB, the SEC and its staff, preparers, auditors, and investors alike have been asking for requirements to be made simpler, more transparent, and easier to understand. And I would guess everybody reading this article is in favor of reducing complexity in financial reporting.
 

IFRS and GAAP: The Good and the Bad

September 25, 2007

For decades, we in the United States have generally believed that our accounting standards are the best in the world. Much of the rest of the world has reinforced that view by accepting financial statements prepared under U.S. Generally Accepted Accounting Principles for use in their markets. But International Financial Reporting Standards are now accepted or required in more than 100 countries. The United States is virtually the only developed market that does not accept financial statements prepared under IFRS.
 

Setting Testing Levels For 404 Compliance

July 31, 2007

I was acting chief accountant at the Securities and Exchange Commission in May 2003 when the Commission’s first set of rules implementing the provisions of Section 404 of the Sarbanes-Oxley Act—the section that requires management and auditor reporting on internal controls—were passed. No other part of SOX has generated nearly as much controversy, anger, frustration, or backlash. On the other hand, no part of SOX has as much potential to contribute to investor confidence and high-quality financial reporting over the long term as Section 404.
 

Avoiding Unnecessary Restatements

May 08, 2007

There are too many restatements. I’d wager that everybody reading this column agrees with those first five words, and that’s why I used them to start off my first column for Compliance Week.
 
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