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Evolving Answers on Good Accounting Policy

Scott Taub | 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.

In a 2006 speech about the issue of judgment in accounting, I used quotes on the topic from SEC chief accountants going back to the 1950s. Of course, issues like fair value versus historical cost, principles versus rules, and off-balance sheet accounting have been kicked around for decades. And in those decades, we’ve generally tried multiple solutions for each of these and many other topics. Which brings us to the second half of my partner’s saying—the questions never change, “but the answers do.”

Again, he’s absolutely correct. Sometimes the answers change because business changes, but in many situations, consensus around what is the right answer changes even though the facts... To get the full story, subscribe now.