Does Firm-Specific Knowledge Matter for New Audit Committee Chairs and Financial Reporting Quality?

By Linda A. Myers, Roy Schmardebeck and Stefan Slavov June 10, 2021 by renholding

Overcoming the learning curve for a new situation or role at work can be difficult, especially when the situation or role requires specialized knowledge. Newly appointed audit committee chairs face a particularly steep learning curve, given that audit committees of …

SEC Commissioner Lee Speaks on Myths and Misconceptions about “Materiality”

By Allison Herren Lee May 26, 2021 by renholding

Thank you, Neil [Stewart] for the introduction and for having me today as you discuss the important and timely topic of climate and ESG disclosures. I very much look forward to hearing from Janine [Guillot] and Julie [Bell Lindsay]. You

…

The Efficacy of PCAOB Operational Decision Making

By James J. Blann, Tyler J. Kleppe and Jonathan E. Shipman May 11, 2021 by renholding

The operating budget of the Public Company Accounting Oversight Board (PCAOB) has grown significantly since the regulator’s inception, with the total annual resources consumed by the PCAOB almost doubling—from $127 million to $252 million—between 2006 and 2018 (PCAOB 2007, 2019). …

SEC Speaks on Accounting and Reporting Considerations for SPAC Warrants

By John Coates and Paul Munter April 13, 2021 by renholding

In a recent statement,[1] Acting Chief Accountant Paul Munter highlighted a number of important financial reporting considerations for SPACs.[2] Among other things, that statement highlighted challenges associated with the accounting for complex financial instruments that may be common

…

SEC’s Acting Chief Accountant Discusses Reporting and Auditing Issues for Companies Merging with SPACs

By Paul Munter April 1, 2021 by renholding

In recent years, we have seen significant market developments and innovation in our capital markets, with a variety of structures being utilized to raise capital and facilitate taking private companies public.[1]

The U.S. capital markets are often described as

…

How Scrutinizing Honest Managers Encourages Earnings Management

By Jessen L. Hobson and Sebastian Stirnkorb January 28, 2021 by renholding

Research in finance and accounting consistently documents that a significant number of managers overstate reported earnings when true earnings miss a benchmark [1]. Managers face strong incentives to meet and beat important earnings thresholds, such as the analyst consensus forecast …

Financial Regulators Offer Update on Audit Quality in Emerging Markets

By Jay Clayton, Sagar Teotia and William D. Duhnke III November 25, 2020 by renholding

Over the past several years, the exposure of U.S. investors and our capital markets to companies with significant operations in emerging markets, including China, has increased.[1] This increased exposure carries with it a number of significant risks and challenges,

…

How Managers’ Ability to Gather Information Can Affect the Value of Conservative Accounting

By Christian Laux and Volker Laux August 21, 2020 by renholding

Academics and practitioners, including lawyers, emphasize the importance of conservative accounting to lenders and corporate boards, allowing them to intervene and take corrective actions at an early stage. However, conservative accounting may also increase the risk of false alarms and …

Accounting and Convergence in Corporate Governance

By Martin Gelter July 1, 2020 by renholding

Convergence in corporate governance – the adoption by various countries of similar governance laws and practices – and whether it is even occurring have been a hot topic of debate over the past 20 years, particularly in the legal and …

SEC Chief Accountant on Importance of High-Quality Financial Reporting in Light of Covid-19

By Sagar Teotia June 25, 2020 by renholding

On April 3, 2020, the Office of the Chief Accountant (OCA) issued a statement[1] regarding the importance of high-quality financial reporting in light of the significant impacts of COVID-19.[2] At that time, in addition to facing a number

…

Introducing Machine Learning to Corporate Fraud Detection

By Yang Bao, Bin Ke, Bin Li, Y. Julia Yu and Jie Zhang June 5, 2020 by renholding

Accounting fraud is a worldwide problem with potentially serious consequences, but it is often detected after the damage has been done. Hence, efficient and effective methods of detecting corporate accounting fraud would offer significant value to regulators, auditors, and investors.…

Does State Sponsor of Terrorism Disclosure Limit SEC Financial Reporting Oversight?

By Robert Hills, Matthew Kubic and William J. Mayew May 19, 2020 by renholding

The Securities and Exchange Commission (SEC) regularly reviews financial filings to ensure compliance with accounting standards and other disclosure requirements. The SEC review team analyzes firm’s financial filings and asks questions (in a comment letter) about perceived deficiencies. A comment …

Financial Regulators Warn Over Chinese Audit Quality Amid Coronavirus Outbreak

By Jay Clayton, Bill Hinman, Sagar Teotia and William D. Duhnke III February 20, 2020 by renholding

In November 2019, we met with senior representatives of the four largest U.S. audit firms, including certain of their network representatives, to discuss audit quality across their global networks and certain of the challenges faced in auditing public companies with

…

Do Firms Conceal Material Misstatements by Reporting Revisions Rather than Restatements?

By Rachel Thompson October 15, 2019 by renholding

Disclosure of financial reporting errors is vital to maintaining investors’ trust in the capital markets. Yet, in recent years the number of misstatements corrected in restatements of financial reports has declined dramatically, and misstatements are now more likely to be …

Do Managers Bias Earnings Forecasts in Response to Current Earnings Surprises?

By Stephen P. Baginski, John L. Campbell, Patrick Ryu and James Warren July 25, 2019 by renholding

Each quarter, managers provide a summary of their firm’s accounting performance – a disclosure known as a quarterly earnings announcement. Earnings announcements attract significant attention from investors and media outlets because, if earnings are different than market expectations, stock price …

The Imperative for Blockchain Accounting

By Dov Fischer June 7, 2019 by renholding

For hundreds of years, the basic flowchart of accounting information has been the same. A firm records its own transactions, maintains a record of those transactions, and reports those transactions (Soll, 2014, xiv). Trends in technology make it inevitable that …

SEC Chief Accountant Talks the Future of Financial Reporting

By Wesley Bricker May 3, 2019 by renholding

I’m grateful for the opportunity to visit Baruch College’s Zicklin School of Business and speak at the annual financial reporting conference for the fourth time. Many students who were starting their collegiate work here when I first spoke at this

…

Opening the Black Box of Companies’ Capital Investment Process

By Gilles Hilary, Mark (Shuai) Ma and Wenjia Yan April 16, 2019 by renholding

In spite of intensive academic research on capital expenditure efficiency, how firms make investment decisions remains largely a black box. We analyze that process by dividing it into two stages: budgeting of capital expenditures (CapEx) and execution of the budget. …

Sullivan & Cromwell Discusses Key Considerations for Annual SEC Filings

By Robert E. Buckholz, Catherine M. Clarkin, Robert W. Downes, James M. Shea Jr. and Danielle B. Abada February 25, 2019 by renholding

As issuers prepare their Form 10‑K and 20‑F filings for fiscal year 2018, they should consider the guidance provided in some recent speeches from officials of the Securities and Exchange Commission (“SEC”), which highlight a number of considerations relating to …

The Operating Returns to Acquired Intangible Assets

By John M. McInnis and Brian Monsen November 15, 2018 by renholding

Accounting rule makers have long debated whether companies should recognize intangible assets on their balance sheets. At the heart of this debate is whether recognized values can predict future income and cash flows, or whether the high degree of measurement …

« Previous 1 2 3 4 5 Next »

The CLS Blue Sky Blog

Columbia Law School's Blog on Corporations and the Capital Markets

accounting