Some Conceptual Tensions in Financial Reporting American Accounting Association's Financial Accounting Standards Committee (FASC)
Yuri Biondi, Jonathan Glover, Karim Jamal, James A. Ohlson, Stephen H. Penman, Shyam Sunder, Eiko Tsujiyama
ACCOUNTING HORIZONS
26
(
1
)
125
-
133
2012.03
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We examine four key conceptual tensions that are at the heart of many financial reporting dilemmas: stocks versus flows, ex ante versus ex post, conventions versus economic substance, and top-down design versus bottom-up evolution as sources of accounting practice. Associated with each of these conceptual dimensions is an accounting duality; in some cases, one side (e.g., stocks) is easier to measure in a reliable manner, while the other side (e.g., flows) is easier to measure in other instances. We suggest that financial reporting would benefit from a willingness to pay attention to, and find compromise between, both sides of these tensions; forcing a choice of one over the other does not serve to improve financial reporting.
A Perspective on the Joint IASB/FASB Exposure Draft on Accounting for Leases American Accounting Association's Financial Accounting Standards Committee (AAA FASC)
Yuri Biondi, Robert J. Bloomfield, Jonathan C. Glover, Karim Jamal, James A. Ohlson, Stephen H. Penman, Eiko Tsujiyama, T. Jeffrey Wilks
ACCOUNTING HORIZONS
25
(
4
)
861
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871
2011.12
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The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an "ownership" model to a "right-of-use" model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or off the balance sheet classifications. We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.
Accounting for Revenues: A Framework for Standard Setting
James A. Ohlson, Stephen H. Penman, Yuri Biondi, Robert J. Bloomfield, Jonathan C. Glover, Karim Jamal, Eiko Tsujiyama
ACCOUNTING HORIZONS
25
(
3
)
577
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592
2011.09
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This paper proposes an accounting for revenues as an alternative to the proposals currently being aired by the FASB and IASB. Existing revenue recognition rules are vague, resulting in messy application, so the Boards are seeking a remedy. However, their proposals replace the traditional criteria-revenue is recognized when it is both "realized or realizable" and "earned"-with similarly vague notions that require both the identification of a "performance obligation" and the "satisfaction" of a performance obligation. Our framework aims for the concreteness that yields practical accounting solutions. It has two features. First, revenue is recognized when a customer makes a payment or a firm commitment to pay. Second, revenue recognition and profit recognition are combined, with profit recognition determined on the basis of objective criteria about the resolution of uncertainty under a contract, and then conservatively so. Two alternative approaches are offered: the complete contract method (where profit is recognized only on the termination of a contract) and the profit margin method (where a profit margin is applied to recognized revenues throughout the contract as the contract profit margin becomes clear. The latter requires resolution of uncertainty, so the completed contract method is the default.
Comments on the Proposed SEC's 2010-2015 Draft Strategic Plan
Robert Bloomfield, Theodore E. Christensen, Jonathan Glover, Sue Haka, Karim Jamal, James A. Ohlson, Stephen Penman, Kathy Petroni, Eiko Tsujiyama, Ross L. Watts
ACCOUNTING HORIZONS
24
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1
)
109
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115
2010.03
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SYNOPSIS: The SEC has proposed a strategic plan that sets out its mission, vision, and values, four strategic goals, a set of desired outcomes associated with each strategic goal, and a list of performance measures for assessing the SEC's effectiveness in attaining its goals. We affirm the need for vigorous enforcement of securities law and offer some research-based insights and performance indicators. We also acknowledge the importance of disclosure, but propose that the SEC needs to develop a disclosure framework and develop better operational indicators of quality of disclosure. It is important to appreciate the benefits of disclosure as well as its limits and potential dysfunctional consequences. We also discuss the need for an independent accounting standard setter and recommend that the SEC take a greater role in enhancing the independence of the FASB.
THE SYSTEMATIC STUDY OF COMPREHENSIVE INCOME : THEORETICAL ANALYSIS AND EMPIRICAL ANALYSIS
Study on Conceptual Framework of Revenue Recognition
International Comparison of basic theory in Financial Accounting
Presentations
Presentations
“Globalization of Accounting Standards: The Japanese Experience” Panel session -How to do accounting standard-setting all around the world: Global, national, transnational?
Presentation date:
2012.08
Comprehensive Income Reporting and Japanese Accounting Standards
Presentation date:
2008.03
Committee Memberships
Committee Memberships
2001.04
-
2008.10
Member of Standards Advisory Council (SAC) of International Accounting Standards Board (IASB),
Member