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February 17, 2006 at 12:03 PM
Members of the Financial Accounting Standards Board say they wish accountants had the confidence to use sound professional judgment when creating corporate financial reports.
FASB members deplore the current state of corporate financial accounting in a new response to a U.S. Securities and Exchange Commission report released in June 2005.
The SEC report dealt with efforts to report on the finances of a wide variety of “off-balance sheet” activities, entities and investments.
One key section of the SEC report dealt with accounting for defined benefit pension plans and other post-employment benefits.
Today, the FASB needs help from the SEC and the Public Company Accounting Oversight Board to deal with “powerful forces,” such as pressure to burnish company earnings and fears of lawsuits, that block efforts to improve accounting, FASB members write in their response to the SEC report.
“Many of those forces engender a culture that results in a constant demand for detailed rules, exceptions, bright lines, and safe harbors,” FASB members write. “We also continue to receive regular demands from public and private companies and industry groups for special exceptions and accounting treatments to suit their particular business models, practices, and objectives.”
