Ten years ago, while I was acting chief accountant at the Securities and Exchange Commission, one of our biggest concerns was how to reduce the complexity in financial reporting. While other issues have come and gone in the time since, the idea that U.S. Generally Accepted Accounting Principles should be simpler has continued to resonate with companies, auditors, regulators, standard setters, and even financial statement users.
A decade ago, we thought that complexity could be addressed best in the development of new standards, by ensuring that standards were principles-based and that we didn’t develop a special accounting model for every new transaction. And the Financial Accounting Standards Board has generally done that, with some success. The new revenue recognition standard, for example, replaces more than 450 pages of guidance in the Accounting Standards Codification with around 275.
