FASB Examines Business and Financial Reporting, Challenges from the New Economy.

• Position: Brief Article

Many observers maintain that there is a disconnect between the information provided in today's financial statements and the information needs of investors and creditors. In examining this issue, observers point to the widening gap that exists between information needs of "New Economy" companies and "Old Economy" financial reporting. The Financial Accounting Standards Board has published a Special Report, Business and Financial Reporting, Challenges from the New Economy, that examines the intersection between the new economy and business and financial reporting.

The report reviews a range of studies and articles that compare accounting treatments for traditional assets and the challenges of new economy notions of intangible assets. It concludes that the debate over "new" versus "old" is unhelpful and that the perceived shortcomings of business and financial reporting do not easily lend themselves to a simplistic and single solution. The more important question is whether business financial reporting should change and, if so, how.

According to the report, standard setters should focus their attention on:

* Examination of...