Dueling missions - grapevine - Center for Excellence in Accounting and Security Analysis

Watch out FASB: there's a new accounting cleanup crew.

In October, Columbia Business School launched the Center for Excellence in Accounting and Security Analysis (CEASA) with seed money from IBM, the GE Foundation, and Morgan Stanley. According to Stephen Penman, professor of accounting at Columbia and co-director of the center (along with Trevor Harris, a managing director at Morgan Stanley), the think tank will bring together academics, finance executives, and others to develop "independent policy research" on some of today's most pressing accounting issues.

Arthur Levitt, former chairman of the Securities and Exchange Commission, has agreed to chair CEASA's 15-member advisory board. Among the other members are Philip D. Ameen, comptroller at General Electric; Richard Carroll, assistant corporate controller at IBM; Stephen S. Crawford, CFO of Morgan Stanley; and Sallie Krawcheck, CEO of Smith Barney.

First up will be a project on accounting for pension liabilities and another on the reporting of contingent equity securities. Those topics, explains Ameen, best fit the center's mission in that they are "solvable, with solutions that don't automatically leave users, preparers, or regulators in conflicting positions," and it is early enough in their development that "consensus can make a difference." The center plans to outline its solutions in white papers scheduled for March.

The hope is that the guidance will be adopted throughout Corporate America without being mired in the "politics" that often accompanies other standard-setting processes, says Penman. In the current setup, adds Ameen, "standard setters have become ... very linear, starting with conceptual framework decisions made by different boards, sometimes decades ago. And sometimes those decisions don't make much sense now."

Still, how the guidance will be used remains to be seen. For his part, Penman hopes to use a "process of persuasion" to spread the word to corporations, while Ameen just hopes to "advance the dialogue."

COPYRIGHT 2003 CFO Publishing Corp.
COPYRIGHT 2004 Gale Group