Volume 11, Nos. 16 & 17

 

2002:  Accounting Issues Review & Preview  The corporate calamities of 2002 dramatically affected the workload of the FASB. While its docket was full going into the year, what's surprising is that quite a few of its completed projects were "turbo" efforts: ones that weren't even imagined at the start of the year, but begun and completed in 2002. That's a testament to the urgency of the issues created by the failure of Enron, WorldCom and the like. (A darker side: it's also a testament to how fast things can get done when politicians jump into the fray.) That doesn't mean that the pokier-progressing projects were unimportant. To the contrary: all FASB projects are rooted in some kind of financial reporting flaw that denies investors adequate information for decision-making. A curious analyst or investor ought to be interested in precisely what areas financial reporting has been ineffective - and what might be done about it. Any conscientious analyst or investor can learn from the history of current Board projects, if motivated solely out of simple self-interest and self-preservation. This report is a brief history lesson in FASB's current projects, served up with a heaping helping of the year's past accounting news. There's one lesson that the year's events should have taught every analyst who scorns an understanding of accounting as "not important for companies in my industry:" ignore accounting issues at your own peril, because ignorance is not bliss.

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