Free Pricing | JCPenney Coupons | Pizza Hut Coupons | Home Depot Coupons
A Dream of Simpler Accounting

A Dream of Simpler Accounting

by Rick Turoczy on January 25, 2005

Don Nicolaisen, the Securities & Exchange Commission’s accounting chief, doesn’t like clock radios. What he prefers is a plain old alarm clock — one that’s reliable, easy to set, and unembellished with soft rock or ocean sounds.

What does that have to do with accounting regulation? A lot, it turns out.

A major goal for his office in the coming year is to reduce the level of complexity in accounting. To Nicolaisen, simpler really is better, just like he prefers his 20-year-old alarm clock to the high-tech version he found blaring music when he walked into his hotel room on a recent trip. He outlined his hopes for simplification and other priorities in a keynote speech at a conference of the New York State Society of Certified Public Accountants on Jan. 24.

How do you transform today’s accounting regulations (with 800 pages devoted to derivatives accounting alone) into a code as simply functional as an alarm clock? Technology may be part of the solution, and Nicolaisen says he’s in favor of companies using XBRL, which stands for Extensible Business Reporting Language, to tag data points in their electronic filings. That would allow investors to manipulate and analyze financial data in new ways. It will also be a gargantuan undertaking that’s just being studied now.

Nicolaisen said the Commission and accounting regulators in the U.S. are looking at other ways to make accounting more straightforward, such as by segregating operating income from companies’ other income streams to allow investors to better evaluate management’s moves. He also hinted that his staff would be looking at ways to simplify some aspects of revenue recognition as well as accounting for derivatives.

A Dream of Simpler Accounting

Leave a Comment

Previous post:

Next post: