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Old habits die hard. Dennis Beresford retired on June 30 as chairman of the Financial Accounting Standards Board after 10 productive years. He might be expected to look back on his administration, but he is still thinking about the future: Where is financial accounting going? What issues will the FASB have to wrestle with over the next 10 years? Will the FASB even be necessary in an increasingly global economy? Recently, he drew on his years of experience to talk with the Journal about where the FASB and financial reporting generally are heading and the whys and wherefores of the FASB's approach.
"From time to time." said Beresford, "someone asks, `Haven't you resolved all the issues yet? Is there really need to have standard setting continue indefinitely?' I always say `yes.'" New transactions and new ways of processing old transactions are always cropping up, he said, citing derivatives as an example: They've been around for decades as simple commodities futures contracts for additional guidance. "You will see companies searching for even more ways to deal with complexities and different kinds of risks that are part of doing business today."
In addition, the financial accounting community will have to deal with the increasing importance of intangible assets. "Financial statements do not do a particularly good job of capturing these assets, and this is a problem as we move from a manufacturing economy to an information economy. You can easily see how much money Microsoft has in the bank, but how do you find out the value of its intellectual capital? We may need to consider additional disclosures on training or on developing new products, for example."
Beresford also discussed the continued need to address the comprehensive business reporting model presented in the final report of the American Institute of CPA's special committee on financial reporting (the Jenkins …