Welcome back to our 'What is FERF' column! It has been over three months since our spring 2014 article and plenty has changed. For starters, the FASB and IASB have released the much anticipated revenue recognition Accounting Standard Update (ASU) 2014-09 - Revenue from Contracts with Customers (Topic 606). FERF has released eight reports, in addition to our quarterly Financial Regulatory Updates for both public and private companies.
Recently Published Reports
A Qualitative Study of Earnings Guidance This report attempts to answer the question--"How does earnings guidance influence the experience of financial executives?" In the wake of the Enron scandal over a decade ago, many blue chip firms announced that they would stop providing earnings per share (EPS) guidance. Yet such guidance remains alive and well. Roughly half of S&P 500 firms provide EPS forecasts. Guidance advocates argue that earnings forecasts reduce investor uncertainty. Critics worry that guidance invites dysfunctional behaviors as executives scramble to achieve previously announced targets. This qualitative study utilizes interviews and summarizes responses from financial executives at 31 U.S. publicly traded companies to explore the research question.
CFO Quarterly Global Outlook Survey: July 2014 reveals that chief financial officers (CFOs) are expressing more optimism about their businesses and the broader economy. This report also shows that CFOs are experiencing an average increase of 5 percent in related costs from the Patient Protection and Affordable Care Act and their overwhelming dissatisfaction with the current U.S. tax laws. U.S. companies do not have cash constraints and believe that U.S. interest rates will remain low until the end of 2015 or the beginning of 2016.
2014 Financial Executive Compensation Survey shows that the overall total compensation improvements this year, including salaries, incentives and benefits, may indicate a turning point. Information gathered indicated that financial executives received higher average salary increases than the average 3 percent increase in the business marketplace. The report also indicates that the growth rate in the number of finance and accounting employees is improving. "Organizations have been hesitant to hire, and they've been asking employees to do more with less and hiring contractors," says Ken Troy, director in Grant Thornton LLP's Compensation and Benefits Consulting.
Proposed New Lease Accounting...