FASB's Crooch takes issue with FEI's CEO on financial statements.In the President's Page (January/ February 2006), Colleen col·leen n. An Irish girl. [Irish Gaelic cailín, diminutive of caile, girl, from Old Irish. Cunningham asserted that general-purpose financial statements are trying to do too much. Instead, she specifically asserted that: * Users are causing the FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). to require more information in the statements because disclosures outside the statements are erroneously perceived as not being as reliable. * Financial statements should not include forward-looking information, nor should they try to provide a company's value. * The primary purpose of financial statements should be to reflect management's stewardship to existing stockholders. * The U.S. is virtually alone in not making stewardship the statements' purpose. Let's examine those assertions. First, there is a growing body of academic research indicating that numbers disclosed outside of the statements are in fact less reliable. Moreover, questions raised in our recent stock options project suggested constituents would take more care determining the options expense numbers to be recognized in the financial statements under Statement 123(R) than in the numbers disclosed outside the statements under Statement 123. Second, I don't know Don't know (DK, DKed) "Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. of any standard-setter who wants to turn the financial statements into forecasted statements or have them provide a company's value. But, many of our constituents urge us to bring more information into the statements themselves, such as off-balance-sheet financing Off-Balance-Sheet Financing A way of raising money that does not appear on the balance sheet. Notes: This is unlike loans, debt and equity, which do appear on the balance sheet. . Would that further overload the financial statements? Third, she implies that only backward-looking information is what stockholders need to assess management's stewardship of the assets entrusted to it. However, such information is not adequate for ascertaining all of the assets management has entrusted to it, whether it has used those assets efficiently, and whether it has preserved or enhanced their value. Finally, the U.S. is not at all alone in not viewing stewardship as the primary purpose of financial statements. Indeed, the International Accounting Standards Board  An editor has expressed concern that this article or section is .Please help improve the article by adding information and sources on neglected viewpoints, or by summarizing and (IASB IASB See International Accounting Standards Board (IASB). ) and over 100 countries around the world that have adopted IASB standards embrace the same view. Despite our differing views on these and other matters in her letter, I very much appreciate the effort to bring the conceptual framework For the concept in aesthetics and art criticism, see . A conceptual framework is used in research to outline possible courses of action or to present a preferred approach to a system analysis project. project to the attention of readers, and encourage them to join the debate. G. Michael Crooch, Board Member Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). |
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