Regulators May Question Firms’ Application of Revenue Recognition Rules [CFOJ]
One problem that some people have with principles-based accounting is that it allows for too much judgment (i.e. earnings management, i.e earnings manipulation). They say that this is especially dangerous around revenue accounting because, you know, companies like showing people their higher revenue and that leads to overstating assets, etc. So how companies interpret the new revenue rules will be interesting, which is why the SEC is just gonna put this out there:
Companies that veer too far away from new revenue recognition guidance will have to explain their reasoning to regulators.
“If a company chose to take a different approach, we would expect them to come in and talk to us about why they were not going to follow the … non-authoritative guidance,” said James Schnurr, chief economist for the Securities and Exchange Commission.
That quote is a little strange, but I think we get the gist. Anyhoo, I don't get the sense that companies will a) ever think they're too far away from the new guidance and b) voluntarily explain why. Companies have been explaining why something non-GAAP is GAAP for decades. Sometimes they get their auditors and others to buy that argument and sometimes they don't. When they don't, auditors tell you, "No, do it this way," or, if you're really lucky, the SEC says, "This isn't right. You're in trouble." Call it a hunch, but I don't see companies who prefer aggressive revenue recognition policies to suddenly be all gung-ho to follow an honor system.
In other financial reporting developments, the FASB is releasing its lease standard today. “I think the final iteration of the standard makes it very real now for U.S. companies,” says a Deloitte guy.
Anxious for Re-Election, Senator Richard Shelby Refuses to Act on Banking Nominations [NYT]
The other day, we mentioned that SEC chair Mary Jo White didn't plan to make a decision on the PCAOB chairmanship until the Commission had five members. Even though President Obama has put forth two nominees, the Senate Banking committee has no timeline for approving them because its chairman, Richard Shelby of Alabama, is running for re-election. And those appointments aren't the only ones he's holding up:
[Shelby] now has the distinction of running the only committee in the Senate that has not acted on a single nominee in this Congress.
Mr. Shelby has interfered with economic sanctions and hampered the work of the Export-Import Bank and the Federal Reserve. The committee’s work spans a number of policy areas, and so do the officials it approves. Or in this case, fails to approve.
“My primary is Tuesday!” Mr. Shelby said in an interview on Tuesday. “We can talk about this later!”
But as of now, the members of the Board of Governors of the Federal Reserve is short two members — meaning interest rate decisions are being made without a full team — as is the board of the Export-Import Bank, which means the bank, lacking a quorum, cannot authorize loans over $10 million.
More urgently, Democrats say, is the lack of approval of Adam J. Szubin, the acting under secretary for terrorism and financial intelligence at the Treasury Department, even as Mr. Szubin oversees Treasury sanctions that target some 6,000 people and institutions.
In total, "16 men and women are waiting for the committee to act." Ohio Senator Sherrod Brown said, "This isn’t a game. Clearly this has had impact on people’s lives.” To quote another, "OH, but it IS a game!" Regardless of your political persuasion, an 81-year-old, five-term (seeking sixth) Senator failing to do the basic duties of his job is abjectly ridiculous. If he was a Millennial, people would demand he "quit crying and get to work."
Accountant battered man he found kissing his wife [WT]
I'm not much for stories of cheating spouses or whatever but the circumstances around this one are too good not to share:
An accountant who caught his teacher wife kissing another man in a Wigan nightclub flew into a jealous rage and launched a vicious attack, a court heard.
Paul Murphy’s first blow knocked him to the floor and he then repeatedly punched him until bouncers dragged him off his victim, semi-professional singer Andrew Crawford.
Sentencing him Recorder David Turner, QC, said that the victim and Murphy’s wife had been mutually attracted to each other and kissed each other.
“That was foolish behaviour by both of them. You saw those stolen kisses and in a jealous rage you punched him to the ground and continued to punch him until separated by door staff.
“You gave him no chance. This was not a fair fight, you attacked him and continued in it. Without doubt you were drunk yourself having spent the previous 12 hours drinking.
I'm pretty sure that after 12 hours of drinking, most of us don't need much of a reason to pummel any semi-professional singer.
In other news:
- Mitt Romney believes "there's a bombshell in Donald Trump's taxes."
- "We are grateful for the years we have worked with our accountant, which is why the next time we visit we are going to take a small thank-you gift. A St. Bernard."
- Chinese man takes drugs to get himself locked in police cell to escape nagging parents
- Get it together, Egypt.
- Selfie security.