September 27, 2022

Accounting News Roundup: Revenue Recognition Is Hard; CFO Board Members; Amended Tax Returns | 11.17.15

Revenue Recognition Accounting Changes Could Have Long Tentacles [CFOJ]
People are worried about the new revenue recognition standard because it's going to affect lots of things, namely, everything:

“Revenue touches everything,” said Stephen Rivera, senior director of financial compliance and procedures at Johnson & Johnson Inc. “It’s like an octopus,” he said during a Financial Executives International conference in New York Monday. “It has tentacles all over the income statement.”

My first reaction is, "Obviously, bro." I don't think most people looked at the exposure draft and thought, "Maybe this won't be that bad." It's revenue! How about, "Revenue is the lifeblood of a company."? How some companies earn revenue is complicated; for others, it's really complicated and it's hopelessly complicated in other cases (looking at you, Valeant). I sympathize with the plight of controllers everywhere, but complaining about the effects now is sorta lame. Plus, the octopus metaphor is just weird. Octopi are frightening, soft, spineless creatures that squirt ink at their enemies. Does that sound like revenue? No it does not. It may sound like one of your co-workers, but it does not sound like an octopus.

To Find a CFO, Many Firms Turn to Their Own Board Members [WSJ]
The trend of giving former CFOs board seats just in case a company needs to replace theirs make sense. Executives that have spent the last decade-plus learning the ins and outs of Sarbanes-Oxley come in handy if you find yourself in a pinch. Plus, they probably won't be dissuaded by 42-page auditor letters. But what's really interesting about this particular article is an anecdote from Crocs: 

Erstwhile Crocs Inc. CFO Jeffrey Lasher began looking for a new job when the company placed Carrie Teffner, a well regarded former finance chief, on its board of directors in June.

Earlier this month the Colorado footwear maker named Ms. Teffner, former CFO for PetSmart Inc., as its next finance chief. Crocs said in September that Mr. Lasher would join boating-equipment retailer West Marine Inc. this month.

He said he didn’t know if his CFO position at Crocs was actually in jeopardy, but “there was a threat from Carrie, perceived or true,” based on her experience. “She’s an exceptionally strong executive,” he added.

I really appreciate the level of vulnerability and instinct here. Lasher wasn't quite sure what to make of Teffner being on the board, but he knew when to get out. And now he's talking to the Wall Street Journal about it. I don't know how you get those skills, but we could all use some.

Clinton charities refile six years of tax returns to amend errors [Reuters]
Amended tax returns are typically NBD. However, if your husband used to be president and you want to be president, then your charitable foundation amending six years of tax returns becomes the Pentagon Papers to some people. For the Bill, Hillary & Chelsea Clinton Foundation and the affiliated Clinton Health Initiative, they needed to disclose $20 million in donations from foreign governments that were not previously reported separately. Interestingly enough, PwC did not crumble as a result of this, as some people thought they might.

In other news:

  • Judge Rebuffs Fantasy Sports Sites in New York [NYT]
  • Companies still view XBRL "as a compliance exercise." [WSJ]
  • GAO: IRS Lacks Adequate Internal Controls [TaxProf]
  • Emoji is Oxford Dictionaries' word of the year.

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