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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis.

Jun 27

Written by: Jack Ciesielski
6/27/2005 7:10 AM 

A very good article on Friday in the New York Times, by Floyd Norris. Quote: "If you hide the facts on a different page of the financial statement, investors will ignore them."

What he's referring to is the concept of "comprehensive income," a statement that's been required in U.S. financials since before the turn of the century. (This century. In 1998, to be precise.) Here in the U.S., the statement is allowed to be presented in a number of different ways and locations in the financial statements, and it doesn't get a lot of attention from investors.

The IASB is proposing that such a statement be included on the income statement after "net income" - up front, where investors will see it and think about it, instead of buried in say, a statement of stockholders' equity. In fact, this approach was originally considered by the FASB when it developed Statement 130; if the IASB proposal goes through as planned, we might see such a presentation here in the United States as the two standard-setting bodies continue their efforts to converge the two sets of standards into one.

That's "if." According to the NYT article, the French and others in the European community are angered over the placement of such information. There could be the invocation of EU interference with this project just as there was with derivatives - and this time, it isn't even over new information. It's about where it's shown. Incredible.