VIDEO: Academic Research Vital for Accounting Rulemakers

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By Steve Burkholder

The rigor of academic research and its larger sample sizes can provide guidance in setting accounting standards that the rulemakers can’t provide themselves, Christine Botosan, a member of the Financial Accounting Standards Board, told Bloomberg Tax.

Accounting professors complement FASB’s in-house research and round out “feedback and input from a broad range of sources,” Botosan, a former professor at the University of Utah, said in a video interview.

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“In academic research they’re using much larger samples in their analysis” than FASB’ staff employs in its research, Botosan said.

“They have a more rigorous approach to undertaking that research,” she said. “As a result, they’re able to draw conclusions that are based on statistical significance.

“And that is a very different type of input than the type of research that we can do ourselves,” said Botosan, who was president of the American Accounting Association in 2014 through 2015. AAA is the main professional group of U.S. accounting academics.

‘Mutually Beneficial Relationship’

FASB resources made available to academics help maintain “a mutually beneficial relationship with the academic community,” Botosan said.

The resources, aimed at helping accounting professors in both research and teaching, include a new academic webpage at FASB’s site.

FASB hopes it will be a “one-stop shop for academics to come to the board and learn very quickly” about the board’s activities, Botosan said. The academic webpage also has links to other sources that are especially important to an academic and provide a mailbox for sending research papers that could be useful to FASB.

The board also hosts an annual “Financial Reporting Issues Conference,” she said. Academics, rulemakers, auditors and other practitioners discuss particularly knotty accounting issues.

Conceptual Framework ‘Critically Important’

FASB seeks advice from academics on its long-running and “critically important” conceptual framework to “refresh and complete” it, Botosan said.

Principles of measurement, presentation and disclosure, as well as definitions of accounting elements such as assets and liabilities, make up the framework.

The conceptual framework provides a pathway to the board’s “destination” of providing information to investors and others to help them decide how to allocate resources, Botosan said.

“So you can view that objective as the destination that a standard is trying to achieve,” she said. “It’s trying to reach that destination.”

If FASB didn’t have a conceptual framework, “we wouldn’t have that intellectual discipline that is imposed upon the board” in its thinking, Botosan said. “And we would run the risk of having standards that would be vulnerable to influences that would take us to a different destination.”

To contact the reporter on this story: Steve Burkholder in Norwalk, Conn. at

To contact the editor responsible for this story: S. Ali Sartipzadeh at

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