FASB's Crooch takes issue with FEI's CEO on financial statements.

• Author: Crooch, G. Michael

In the President's Page (January/ February 2006), Colleen Cunningham asserted that general-purpose financial statements are trying to do too much. Instead, she specifically asserted that:

* Users are causing the FASB to require more information in the statements because disclosures outside the statements are erroneously perceived as not being as reliable.

* Financial statements should not include forward-looking information, nor should they try to provide a company's value.

* The primary purpose of financial statements should be to reflect management's stewardship to existing stockholders.

* The U.S. is virtually alone in not making stewardship the statements' purpose.

Let's examine those assertions.

First, there is a growing body of academic research indicating that numbers disclosed outside of the statements are in fact less reliable. Moreover, questions raised in our recent stock options project suggested constituents would take more care determining the options expense numbers to be recognized in the financial statements under Statement 123(R) than in the numbers disclosed outside the statements under Statement 123.

Second, I don't know of any standard-setter who wants to turn the financial statements into forecasted statements or have them provide a company's value. But, many of our constituents urge us to bring more information into the statements themselves, such as...