Tag: FASB

IASB, FASB Are Really, Really Getting Serious About Convergence

Thumbnail image for merge.jpgDo you have doubts about the IASB and FASB’s commitment to accounting rule convergence? What? The name change idea didn’t convince you?

Well, David Tweedie and Bob Herz both addressed doubters attendees at a joint conference of the American Institute of CPAs and the International Accounting Standards Committee Foundation in New York to let them know that they are redoubling and in some cases, retripling their efforts to get this done.

The boards intend to hold more joint face-to-face meetings, in some cases by video conference, in order to make faster progress.

“We’re going to work on these issues together every month,” said Tweedie. “That’s why we think we’ll make our June 2011 target date.”

Monthly meetings. Some will be face-to-face. When they can’t do that, there will be video conferencing. Is there any doubt how serious they are taking this? This should be a piece of cake now. Oh sure, maybe they’re going to agree to disagree on the fair value thing but who said that’s important?

Wait a minute. Sir David Tweedie’s confidence seems shaky:

The approach may or may not work, and Tweedie acknowledged that some of the standards may take several years to be finalized. In many cases, they will be moving targets. But the goal of achieving a June 2011 convergence of the two sets of standards still seems doable, he insisted, and it would be a once-in-a-generation opportunity.

Good lord. Which is it people? Let’s just agree that accounting standards will be kinda-sorta converged by June 2011 and the rest of them will be converged “at a date yet to be determined”. We understand that the pressure is tough. No need to commit to anything.

IASB and FASB to Meet Monthly on Standards Overhaul [Web CPA]
Accounting Standard-Setters Will Get Much Chummier [Web CPA Debits & Credits]
Earlier: IASB: You Want a New Fair Value Rule? You Got It. Just Don’t Ask Us About Convergence

Accounting Rulemakers Already Talking Plan B on Fair Value

Thumbnail image for tweedie.jpgSounds like Bob Herz and Sir David Tweedie are phoning it in with regards to fair value rules.
Herz and Tweedie and their respective accounting wonks met in Norwalk, CT on Monday and they’re all but admitting that there’s no chance that they’ll get on the same page:

At a joint meeting in Norwalk, Connecticut on Monday, members of the London-based International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) sparred over whether fair value, or “mark-to-market,” accounting rules should be expanded to a broader array of financial assets, such as loans and deposits.
In a move opposed by the banking industry, the FASB has proposed that all financial instruments be valued at market levels, while the IASB has proposed to have those assets valued at “amortized cost,” which would mostly provide information about expected cash flows.
“If FASB and IASB can’t agree on mixed model or full fair value model … the next best thing is something to move between the two,” Sir David Tweedie, chairman of the IASB, said on Monday…”By the end of 2010… if we can’t get it together, we should be appreciably together,” Tweedie said.

Plan B is already in full effect! Instead of one fair value rule, the two standard setters will provide a “presentation for fair value for more financial assets on corporate balance sheets so that investors would be able to quickly reconcile numbers in U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).”
Some board members are worried that this approach may be too confusing, however. Confusing financial statements? That’s only a problem for average investors. No biggie.
Oh, well. We know 2010 is coming up fast and those politicians get impatient when the bank lobbyists are threatening to cut off the money. Thanks for trying guys. You did your best.
Accounting boards try to reconcile fair value views [Reuters/Emily Chasan]

IASB: You Want a New Fair Value Rule? You Got It. Just Don’t Ask Us About Convergence

tweedie.jpgThere’s no doubt that you’ve been awaiting the IASB’s new fair value rule with feverish anticipation. Well, your wait is nearly over because when Sir David Tweedie says he’s going to do something, by God, he means it:

In an address to a meeting of European Finance Ministers, which have in the past been critical of the IASB’s response to the financial crisis, Tweedie has sought to ease concerns by announcing that he is on track to deliver a new fair value standard by the end of this year.
“I gave a commitment to deliver on this timetable. We will publish the new standard in November,” he said.

This is all very exciting for Tweedie and the IASB since it feels pretty damn good anytime you stick it to your critics but…
Small problem: The new rule still won’t require loans to be marked to fair value which is the exact opposite plan of Bob Herz and the FASB, “FASB’s proposal will see all assets measured at fair value. The IASB’s mixed measurement model would see banks’ loan books valued on an amortised cost basis.”
Obviously the two rulemakers, fresh off the tongue lashings they received from their respective governments for their part in the worldwide economic meltdown, decided that they had no choice but to put out the fair value fire pronto. Meanwhile, convergence of accounting standards (what the IASB is really serious about and could be the next Big 4 gravy train) remains a pipe dream.
Fair value standard will be released next month: Tweedie [Accountancy Age]

The SEC Awkwardly Reasserts its Authority

mschape.jpgThe SEC, having lost every shred of dignity it once had, is kindly reminding everyone that they are the authority on accounting rules. It sounds like the Commission is concerned that some of you might be a little confused by the new FASB Codification and just wanted to put it out there that M. Schape and crew are still the ones in charge.
Forget about any possibility of a bean counter coup that would upend the accounting rule universe. It’s not happening on Mary Schapiro’s watch.
Nevermind that it took the better part of a year to get a Chief Accountant officially appointed. The Commission was probably worried that, with all the hubbub, people may have lost some perspective, that’s all. The SEC, could torpedo this whole Codification nonsense back to the stone age, if it wanted to. Just wanted to remind everyone. Thanks.
SEC Clarifies Authority Over Accounting Rules [Compliance Week]

Dear FASB, I’m Breaking Up With You

begging.jpgEditor’s note: Adrienne Gonzalez is founder and managing editor of Jr Deputy Accountant as well as regular contributor to leading financial/investment sites like Seeking Alpha and GoldmanSachs666. By day, she teaches unlicensed accountants to pass the CPA exam, though what she does in her copious amounts of freetime in the evening is really none of your business. Follow her adventures in Fedbashing and CPA-wrangling on Twitter @adrigonzo but please don’t show up unannounced at her San Francisco office as she’s got a mean streak. Her favorite FASB is 166.
I can’t take it anymore. I’m serious, this is BS. It has been nothing but up and down, agony and ecstasy for as far back as I can remember on fair value and I want off this ride.
More agony, after the jump


Via SmartBrief:

The Financial Accounting Standards Board’s updated fair-value rules will require companies to fully understand fair-value and mark-to-market concepts and extensively document their analysis of illiquid assets, as this article notes. The FASB gave companies some new latitude in applying fair-value principles but stood firmly behind the importance of fair value in preparing meaningful financial statements.

Stop, please. This is getting to be abusive.
Remember when you whispered in our ear, “Certainly, to those who say that accounting should better reflect true economic substance, fair value, rather than historical cost, would generally seem to be the better measure” in 2003, Bob Herz? We totally fell for it. Who wouldn’t? Swept off of our feet and still hurting from Enron, we needed a rebound and fair value totally worked.
Now what?
I truly wish you and IASB the best of luck in whatever you two decide to do with your miserable little lives.
WebCPA:

While FASB may be pushing back in the other direction and mulling the use of fair value and mark-to-mark with bank loans in addition to assets like mortgage-backed securities, the IASB seems to be tacking in an alternative direction. That could be leading them on the road to divergence, not convergence.

And I’m defriending you on Facebook, Bob. At least you know your new girlfriend does fair value.
Love,
AG

Bob Herz is the Most Dangerous Man in America

bob herz.jpgAccording to Reuters columnist, James Pethokoukis, that is. JP argues that the FASB’s most recent attempt to go balls to the wall with mark-to-market will endanger the economy:
“What if an upgraded mark-to-market standard forced slowly healing banks to set aside huge sums to cover paper losses and further crimp lending? Not FASB’s problem.” He also argues that the FASB is motivated by the ideology around transparency as opposed to “practicality and experience”.
The problem, as we see it, with this argument is that JP sees mark-to-market as an inconvenient rule considering the circumstances that the economy is under. That very well may be but we would ask, what the hell is the alternative? “Massaging” the rules every so often, as he puts it? So making the rules less principled when they are inconvenient is the solution? Accounting rules are not written so that we can change them when they don’t work in our favor.
Make no mistake, we’re not crazy about the current system as it exists. GAAP continues to look more and more like the U.S. Tax Code, so the FASB’s sloth-like attempt to develop a “principles system” is promising encouraging something. Mark-to-market is the best reflection of that something. The idea that tweaking of the rules under duress is an acceptable form of determining the direction of financial reporting is what drives accountants f’n berserk.
America’s Most Dangerous Man? An Accountant [James Pethokoukis/Reuters]

Newt Gingrich Doesn’t Like the FASB

NewtGingrichPhotograph.jpgCongress seems hella determined to keep accountants from writing accounting rules. HR 1349, aka the Federal Accounting Oversight Board Act, which was introduced in the Spring would create a board that would consist of the chairs of the Fed, SEC, FDIC, PCAOB, and the Secretary of the Treasury.
This merry band of bureaucrats would basically get to slap the FASB around whenever they want. According to Newt “My head isn’t that big” Gingrich, a supporter of the bill, because of the FASB’S independence, politicians can’t torpedo accounting rules that are “destructive”.
More, after the jump


This gem of legislation has 14 co-sponsors, including seven members from the House Financial Services Committee, along with Gingrich and Paul Volcker. It has been referred to the Financial Services Committee so it will getting some Barney Frank lovin’ soon enough.
Say what you will about the wonks in Norwalk but we’re of the strong opinion that handing over the accounting rule bazooka to this board could possibly be the worst legislation since…anything Maxine Waters has introduced.
Congressional Bill Supports Federal Takeover of Financial Reporting [FinCriAdvisor via Jr. Deputy Accountant]

FASB, Bankers to Continue ‘Religious War’ Over Fair Value

Apparently the wonks in Norwalk are girding up their loins to take on the banks again over fair value, described by FASB member Marc Siegel as a “religious war” (our pick would be The Crusades).
Under new preliminary proposals issued by the FASB last week, all financial assets, including loans would be marked to market every quarter and classifications like held to maturity, held for investment, and held for sale would go the way of the Dodo.
Jonathan Weil conceptulizes:

Think how the saga at CIT Group Inc. might have unfolded if loans already were being marked at market values. The commercial lender, which is struggling to stay out of bankruptcy, said in a footnote to its last annual report that its loans as of Dec. 31 were worth $8.3 billion less than its balance sheet showed. The difference was greater than CIT’s reported shareholder equity. That tells you the company probably was insolvent months ago, only its book value didn’t show it.

Got it? Well, banks are obviously not cool with this, as one lobbyist is quoted, “I guess the nicest thing I can say is it’s difficult to find the good in this.” I guess it’s on then bitches, as it sounds like the banks would much rather bleed out their orifices until the bitter, bitter end as opposed to report anything that is remotely transparent.
Accountants Gain Courage to Stand Up to Bankers: Jonathan Weil [Bloomberg]

Why Do the FASB and IASB Always Insist on Mission Impossible?

Can anyone explain why accounting regulators have the annoying tendency to see a HUGE problem and insist on fixing it when the logistics are seemingly impossible to overcome? It’s commendable to try and solve big problems but it seems that the geeky egos of accountants often get in the way of reality.
CFO.com has a story about the FASB and IASB’s “dream” to get accounting standards down to one model for revenue recognition. ONE!
According to the article, the FASB’s revenue recognition rules are currently spread among 100 standards, so obviously there’s room for improvement but shrinking all that down to one model? Talk about herding cats.
We’re not hating on the standard setters (well, let’s face it, maybe a little) for considering this task but these dweebs can’t even get on the same page re: convergence timing so we’ll be taking the overs on the number of years when this single model pipe dream actually gets off the ground.

Revenue Recognition: Will a Single Model Fly? [CFO.com]

FASB Overseers Hope That Motley Crue-ish Tour Will Help Win Some Fans Back

Motley Crue.JPGThe Financial Accounting Foundation (“FAF”) trustees are going on a tour that will certainly rival the amount of groupie tail that Motley Crue was getting circa late 80s.
“The Financial Accounting Foundation trustees, who oversee the U.S. Financial Accounting Standards Board (FASB), will meet with small closed discussion groups of investors, auditors, academics and regulators in New York, Dallas, San Francisco, Chicago and Washington, D.C., as well as with the FASB’s standing advisory groups.”
It’s pretty clear that the FAF has the intention of spreading their seed knowledge around the country in order to win back some cred for the FASB.

FASB overseers to seek input on new strategic plan [Reuters via Accountancy Age]