Financial Reporting.

Abstract This article comments on issues regarding financial reporting in the U.S. in 1987. The hottest issues in financial reporting these days relate to financial institutions and a wide variety of new financial instruments. Such issues have been demanding a great deal of attention from regulators, independent auditors and standard setters. The minutes of the Financial Accounting Standards Board Emerging Issues Task Force provide especially striking evidence of the variety of and frequency with which those kinds of issues arise. The financial difficulties encountered by a number of commercial banks, thrift institutions and other financial enterprises in recent years have been a source of widespread political, social and economic concerns. Those who are attempting to cope with the problems faced by those institutions depend to some extent on financial information-information in which presently there is much room for improvement. Moreover, financial services is a burgeoning field of economic endeavor. Investment bankers and their legal and accounting advisers have proved to be remarkably creative in devising new financial arrangements that often appear to have been designed, with one eye on the existing authoritative literature, to avoid recognition and measurement in the financial statements. Establishing accounting standards for each new financial transaction or instrument is woefully ineffective.