Volume 24, No. 1 & 2: Accounting Issues: A Look Back At 2014, A Look Ahead To 2015


To provide capital markets with relevant, unbiased information for investment decisions, accounting standard setters must keep pace with creative interpretations of the accounting literature. Sometimes those interpretations are served by the investment banking community; sometimes they come from the chief financial officers of firms; and they might even come from GAAP interpretations of auditors. Such is the nature of financial reporting evolution: there are many possible contributors to the DNA of financial statements, and mutations occur continuously. It’s up to the standard setters to keep the bloodline as pure as possible – which means the standards they issue should ensure neutral, consistent and relevant information to investors. That’s accomplished by either improving existing standards or drawing up new standards when there are none, and flawed reporting is on the loose.
Yet it’s hard for investors to get worked up about the standard setters’ process. Of course they’re happy if new standards move to rein in say, off-balance sheet financing. They’re less happy if a new standard happens to crimp the earnings of one of their favorite companies or industries. Furthermore, it’s consistently difficult for them to keep their attention on the standard-setters’ agenda, unless something is looming that affects their favorites – something that changes their earnings or valuation models. In short, standard setting is a disruptive, but necessary, exercise for investors of all stripes. They might not embrace the standard setting process, but they would miss the results.
The FASB eked out eighteen “Accounting Standards Updates” (ASUs) in 2014; with the exception of the new revenue recognition standard, they were more along the lines of evolution rather than revolution. Eight of them were consensuses of the Emerging Issues Task Force, whose pronouncements rarely carry wide-ranging impact. Still, the FASB’s 2014 output will affect 2015 reporting – and it also shows their 2015 priorities. Presented here is a summary of the FASB’s 2014 pronouncements and its 2015 plans, along with a look at 2014’s accounting and business news.

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