NEWS RELEASE 04/11/01
FASB Publishes Report, Business and
Financial Reporting, Challenges from the New Economy
Norwalk, CT, April 11, 2001—Many
observers maintain that there is a disconnect between the
information provided in today's financial statements and the
information needs of investors and creditors. In examining this
issue, observers point to the widening gap that exists between
information needs of "New Economy" companies and "Old Economy"
financial reporting. The Financial Accounting Standards Board
(FASB) has published a Special Report, Business and Financial
Reporting, Challenges from the New Economy, that examines the
intersection between the new economy and business and financial
reporting.
The report reviews a range of studies and articles
that compare accounting treatments for traditional assets and the
challenges of new economy notions of intangible assets. The report
concludes that the debate over "new" versus "old" is unhelpful. The
more important question is whether business financial reporting
should change and, if so, how.
The report also concludes that the perceived
shortcomings of business and financial reporting do not easily lend
themselves to a simplistic and single solution.
Wayne S. Upton, FASB Senior Project Manager, stated,
"There is no simple financial reporting solution to the issues
raised in the report. The best set of solutions will come from
national and international standard setters working together. The
issues are not limited to a specific country and probably don't
lend themselves to an answer developed by one accounting standard
setter acting in isolation."
The FASB report describes important contributions by
groups in several nations, including the United States, the United
Kingdom, Canada, Denmark, Sweden, the Netherlands, and the
Organization for Economic Cooperation and Development.
The report concludes that standard setters should
focus their attention on:
- Examination of the conceptual and practical issues surrounding
recognition of internally generated intangible assets and
measurement of those assets,
- Expanded and systematic use of nonfinancial performance
metrics; and
- Expanded use of forward-looking information.
An appendix of the report describes four projects
that standard setters might consider in addressing the financial
reporting challenges that are a part of the new economy.
As the Board begins to consider whether it should add
new projects to its agenda, the FASB hopes constituents will view
this report as an opportunity to offer their insights on the
subjects covered. Comment letters would be most useful to the FASB
if received by July 1, 2001.
Business and
Financial Reporting, Challenges from the New Economy is
available free of charge on the FASB's website www.fasb.org.
Printed copies may be purchased by writing to the FASB Order
Department, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116 or
telephoning 800-748-0659. The order code is SRBRC.
About the Financial Accounting Standards
Board
Since 1973, the Financial Accounting Standards Board
has been the designated organization in the private sector for
establishing standards of financial accounting and reporting. Those
standards govern the preparation of financial reports and are
officially recognized as authoritative by the Securities and
Exchange Commission and the American Institute of Certified Public
Accountants. Such standards are essential to the efficient
functioning of the economy because investors, creditors, auditors,
and others rely heavily on credible, transparent, and comparable
financial information. For more information about the FASB, visit
our website at www.fasb.org.
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