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Highlights of Recent "Financial and Accounting Insights"


The Center for Financial and Accounting Literacy publishes a blog entitled "Financial and Accounting Insights." Below are links to recent articles. To subscribe, see the sidebar entitled "For More Insights."


Dec. 7, 2011. Auditor reporting: What more can be done?

July 15, 2010. Dodd-Frank Act Brings Far-Reaching Reforms in Governance.

July 8, 2010. Court ruling probes PCAOB's accountability.

Feb. 24, 2010. SEC strikes the right tone on IFRS.

Dec. 29, 2009. SEC helps investors weigh governance and risks in 2010.

Oct. 21, 2009. SEC introduces

Oct. 21, 2009. SEC strives for investor-friendly e-proxies.

Sept. 15, 2009. SEC focuses on auditor risks following Madoff fraud.

Sept. 9, 2009. New regulatory era will bring broader SEC scrutiny.

August 31, 2009. PCAOB focuses on auditor accountability to investors.

August 22, 2009. Accounting Standards Codification affects quarterly reports.

August 16, 2009. New Auditor Reporting Requirements.

August 5, 2009. Center salutes life and legacy of Ben Neuhausen.

August 2, 2009. Fed proposes rules to protect borrowers.

July 25, 2009. US Treasury outlines sweeping financial regulatory reforms.

July 23, 2009. SEC proposes changes in proxy rules.

July 12, 2009. US Treasury Dept drafts "Investor Protection Act of 2009."

June 15, 2009. SEC publishes proposed rules on auditor reporting.

June 6, 2009.  SEC Chair outlines priorities for 2009.

June 5, 2009.  Accounting Codification gets warm welcome.



Important Trends to Monitor 


Never before have so many fundamental financial and accounting requirements been reconsidered at the same time. Here are the key trends to monitor.


A New Era of Regulatory Reforms

The Road to IFRS

Fair value Accounting



A New Era of Regulatory Reforms


The regulatory framework is about to undergo an historic transformation in response to the global financial and economic crises of 2008 and 2009. In general, the emerging landscape is likely to reflect the principles that formed the foundation for US President Barack Obama's 2008 election campaign:

  1. Consolidation of the regulatory agencies that comprise the US financial regulatory system;

  2. Establishment of tougher liquidity, capital and disclosure requirements for financial institutions;

  3. Greater federal oversight of unregulated businesses (e.g., hedge funds, mortgage brokers, derivatives dealers and credit rating agencies);

  4. Greater penalties for market manipulation and predatory lending;

  5. Creation of a new financial market oversight commission to review conditions regularly and advise the president and Congress about potential risks; and

  6. Giving shareholders a greater say in executives' compensation and nomination of the directors who serve on corporate boards of directors. 

These principles generally favor greater transparency in financial reporting and reforms in the area of corporate governance to make boards of directors more accountable and better protect investors. Major milestones are summarized here.


The Road to IFRS


The momentum toward US use of international accounting and reporting standards has slowed considerably as regulators have studied the causes and effects of accounting and reporting on the financial crisis. International Financial Reporting Standards (IFRS) are generally less rigorous and robust than US rules and standards, and a fast move to embrace them for US use would appear to be inconsistent with the goals of more (rather than less) regulations. Here are some recent entries from our blog on accounting:


Feb. 24, 2010. SEC strikes the right tone on IFRS.

May 21, 2009. European Commissioner cites accounting challenges.




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Special reports in progress to be available soon

The Road to IFRS

Fair value accounting

Guide to a New Era of Enforcement







Fair value Accounting


The use and measurement of fair values in accounting and reporting has been especially controversial. This issue is important to the economy because declines in the values that accountants assign to assets can result in write-downs that weaken reported profits and discourage investors. Just as important, lower asset values can be especially troublesome for US banks that may need to sell assets in distressed markets to meet regulatory capital requirements. The write-downs and forced sales cause a downward spiral that may help certain short-sellers, but generally hurts most individual investors.


As an alternative, the American Bankers Association has urged the FASB to permit greater use of economic values for traditional banking activities and to limit the use of market values and fair value accounting to the business models for which it is relevant, such as businesses based on short-term trading activities. Economic value. The value of an asset deriving from its ability to generate income. Read the ABA's release.