To maintain the privilege of self-regulation, accountants must keep their house in order. The interesting thing is that the SEC supports the FASB, but the bankers are going around the FASB, urging the SEC to become more involved in the financial instruments project. Being a profession, self-regulation in accounting is important. He explains that usefulness is the primary criterion in changing the reporting of foreign exchange derivatives. Whether such changes will reduce the possibility of future debacles is an open question.
Usefulness is an important term in accounting.
The constraint is that it's costly to gather this information. Multinational companies and the FASB look at the cost effectiveness of gathering information needed to meet requirements. They need additional discussion in the footnotes. Changing reporting methods is a lengthy process that involves public hearings. There has been input by the Federal Reserve System's Alan Greenspan, and Edmund Jenkins, head of the FASB, testified before Congress on how the process came about.