Volume 27, No. 6
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
The curtain comes down on The Analyst’s Accounting Observer after a 26-year run. Consider this report as the series finale. Rather than take on a new topic, this report will recap accounting and financial reporting issues covered in each of the three decades of the Accounting Observer’s existence. Some issues might seem quaint; some issues still fester. They’re covered as a reminder of how much has changed in financial reporting – and how much hasn’t.   ..read more
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Volume 27, No. 5
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
The year: 1976. The Cray-1 supercomputer is released. The Apple Computer Company is formed. The Ramones release their first album. Jimmy Carter was president. And the three-year-old FASB released its thirteenth financial accounting statement, this one on lease accounting. That standard unified the accounting and disclosures for lessees – unified in the sense that the majority of lessees never recognized any asset or obligation stemming from their leasing arrangements. That was not FASB’s intention when they developed the standard: it was expected to put lessee obligations onto balance sheets ..read more
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Volume 27, No. 4
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
The investment world has endured, even thrived, on a rapid pace of evolution, in just about every regard. The speed with which information is transmitted by companies to markets has been whittled down to nanoseconds; investor attention spans and holding periods have compressed by nearly as much. Derivatives have made hedging possible of practically any kind of risk, and in so doing, perhaps raised risks that aren’t even understood yet. Financial models have multiplied exponentially, and cheap or free software puts many of those models into the hands of more users who never understood the model ..read more
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Volume 27, No. 3
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
Reading a firm’s 10-K and annual report might seem to be an anachronism in an era where tweets move stock prices and pure market volatility can be bought and sold just like so many cans of beans. Digital technology makes it possible for investors to do incredible things: they can monitor a company’s website to see how active it is and make judgments about “conversions” of site visitors into paying customers. They can teach machines to search for key words in SEC filings and make automated trading rules based on the findings. They can pluck volumes of specific data out of the SEC’s EDGAR databa ..read more
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Volume 27, No. 2
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
An early Christmas present to Corporate America arrived December 22, 2017 when President Trump signed the Tax Cut and Jobs Act (TCJA)into law. That piece of legislation re-engineered large portions of the Internal Revenue Code as it relates to corporations. While the Act simplified some aspects of corporate taxation, it overturned analysts’ conventional understanding of how taxes interact with financial reporting and in turn, affect securities valuation.  Compounding the urgency for all players to understand effects, the Act arrived only nine days before the end of the year. The effects o ..read more
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Volume 27, No. 1
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
As the saying goes: those who do not learn from history are condemned to repeat it. In business, most players are concerned with making history, not learning from it. While each year that passes is usually scorned by the press as the worst one ever, jibes about the severity of the year just ended aren’t always refreshing. (One exception: humorist Dave Barry’s annual review, reachable here.)   Most reviews of the year gone by contain a political slant - and maybe this year, that slant became more pronounced. Chalk it up to cause and effect: it’s been a political year like no other in this ..read more
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Volume 26, No. 13
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
The American Institute of Certified Public Accountants held its annual “Current SEC & PCAOB Developments Conference” in Washington, DC from December 4th through 6th. CPAs of all sorts - auditors, preparers, regulators - teemed the conference center in search of camaraderie and gossip, and most importantly, information from the speakers. Those speakers came from the major accounting regulators and standard setters: the SEC and PCAOB, the FASB, and the IASB. In mere days, everyone who attended will be shuffling through their yearly 10-K moves. The external auditors will audit away, and sign ..read more
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Volume 26, No. 12
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
Publicly-traded firms have had years to prepare for adoption of Accounting Standards Update 2014-09,“Revenue from Contracts with Customers (Topic 606). “Go time” is at hand: calendar year end firms start reporting under its requirements on January 1, 2018. While long required by the SEC to report anticipated effects of the standard, firms have sparsely disclosed details about its expected effects. If the standard is as revolutionary as portrayed by the FASB and the Big Four accounting firms, investors would want to know about the material impacts it will bear on revenues and profitability. A s ..read more
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Volume 26, No. 11
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
Accounting Standards Update 2017-12, “Targeted Improvements to Accounting for Hedging Activities,” was issued in late August and will be effective beginning in fiscal years beginning after December 15, 2018 for publicly-traded firms. Expect that firms will want to adopt the standard early, which they are permitted to do.   Why would they choose to adopt this standard early? After all, new standards imply a learning curve and more modifications of accounting systems, with costly input from consultants. If this standard were to significantly improve profits immediately, that might be an inc ..read more
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Volume 26, No. 10
The Analyst’s Accounting Observer
by Jack Ciesielski
3y ago
Accounting Standards Update 2014-09,“Revenue from Contracts with Customers (Topic 606),” will go live in just a little more than three months. Publicly-traded firms have had years to prepare for it, and years to discuss its effects with owners of the firm. The means for that discussion is in the Management’s Discussion & Analysis of SEC financial statement filings - both annual and quarterly. So far - and it’s quite far, by this point - firms have sparsely disclosed details of the new revenue recognition standard’s effects. Investors want to know if it will materially impact revenues and i ..read more
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