August 12, 2005
FASB Issues “Milestone Draft” to Sort Out Financial Instruments
In late July, the FASB offered an advance preview of its project that will sort out the wide variety of financial instruments available in the market – which also will determine where these instruments belong on the balance sheet – by issuing a “milestone draft” that summarizes the FASB’s findings so far.
This is a comprehensive project that will define the differences for accounting purposes between liabilities, equities and assets. While the definitions of each used to be clear-cut in the accounting rules, the lines have blurred with the proliferation of complicated financial instruments – in many cases, new instruments hold characteristics consistent with more than one category on the balance sheet.
FASB Chair Bob Herz Lays Out Global Conceptual Framework
Earlier this week, FASB Chair Bob Herz addressed the 2005 Annual Meeting of the American Accounting Association and laid out an outline of the global conceptual framework that will help set international accounting standards – see this outline in a PowerPoint from Chair Herz. This global project is a joint effort with the IASB – in order to have common standards, it is necessary to have a common framework to base the standards on. The framework has not been revisited for several decades and is being looked at relative to creating consistency in when to use fair value vs. historical cost, and to address relevance vs. reliability, etc.
How to Handle Data Security Breaches
There has been a lot of press – and legislative activity – lately regarding companies that have had data stolen, particularly personal information of their customers. Obviously, this can have serious liability implications for companies.
In this podcast, Ben Wright, a well-recognized Internet lawyer, explains how companies can protect themselves in the face of growing breaches in security that lead to data theft, including:
– What has led to the rash of announced security breaches?
– What type of reactions are legislators having to these publicized
– How many of these breaches do you think go unannounced?
– What risks do companies face if they do not announce a breach?
– What type of policy changes can companies make to help protect themselves