As everyone reading these words knows, Congress enacted the Sarbanes-Oxley Act in 2002 to improve transparency and accountability in business processes and financial reporting. The intent was to increase confidence in public markets. Section 404 of SOX outlined the requirements for senior management at publicly traded companies to assess the effectiveness of internal controls, and […]
Colleen Cunningham
Posted inAccounting & Auditing
Will Revamped Financial Statement Benefit Valuation?
The International Accounting Standards Board and the U.S. Financial Accounting Standards Board recently published a discussion paper for public comment on financial statement presentation. The paper presents the boards’ initial thinking on a possible future format. Comments on the paper are due to the boards by April 14, 2009. What’s to comment on? The boards […]
Posted inAccounting & Auditing
How to Handle FASB’s Unfair Value Standard
I had planned to write a completely different column for this month—but, much like the Treasury Department, was inspired by recent events regarding the credit crisis to change course. Let’s talk about fair value accounting. First, it amazed me that the so-called Bailout Bill, as passed, had provisions associated with fair-value accounting in it. Congress […]
Posted inUncategorized
Convergence Coming, but at What Pace?
In case you haven’t heard, International Financial Reporting Standards are coming to the United States—so it’s not IFRS, it’s WHENRS! Bad puns aside, the financial reporting community is expecting the Securities and Exchange Commission (now that all the open commissioner slots are filled again) to issue a proposed roadmap for adopting IFRS sometime in the […]
Posted inAccounting & Auditing
How Fair Value Works When Liquidity Dries Up
My name is Colleen Cunningham, and I weigh 7 pounds, 2 ounces—at least, I do if you go by historical cost accounting. After all, that was my weight at birth, and that’s how historical accounting works, right? Of course, if I say I weigh 110 pounds that would be much closer to reality (although still […]
Posted inTechnology
Preparing Yourself for the XBRL Wave
Once upon a time, I was a young auditor dutifully carrying around my audit bag filled with hand-written green ledger sheets (written with my Pentel, of course). I got on planes to Washington, D.C., to deliver filings to the Securities and Exchange Commission on their due date and walked across New York City to give […]
Posted inUncategorized
What Comes Next for Merger Accounting
Any time now, we are expecting both the Financial Accounting Standards Board and its global counterpart, the International Accounting Standards Board, to issue final standards on accounting for business combinations and non-controlling interests. These standards are the culmination of a joint project between FASB and IASB, and staffs of both boards have participated on the […]
Posted inAccounting & Auditing
Mark to Market, or to Myth? FAS 157 Worries
The Bear Stearns hedge fund meltdown put “fair value” on the front pages. Now, Financial Accounting Standard No. 157 is going to put it on your books, and soon. In case you’ve forgotten, the Financial Accounting Standards Board’s fair value standard will be effective in a couple of months. The standard—known officially as FAS No. […]
Posted inAccounting & Auditing
Bear Stearns, Enron, And Warnings On Fair Value
As has been widely reported in the business media, New York-based Bear Stearns recently announced a $3.2 billion bail out of two of its hedge funds, due to investments in subprime mortgage loans (basically, home loans to borrowers with bad credit). Although the funds had been using fair value accounting to calculate the assets’ worth, […]
Posted inAccounting & Auditing
An Overzealous Definition Of Materiality?
Few concepts involving the preparation of financial statements in conformity with Generally Accepted Accounting Principles are as difficult to address as “materiality.” This is an issue that has been covered by Compliance Week extensively over the last few months; in May, the publication was the first to break the story that the SEC was indeed […]
