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 / Summer 2004 / Issue 35(originally published by Booz & Company)


The World’s Most Exciting Accountant

Long-Term Battle
In the short run, Professor Lev’s ideas may be debated but substantive changes to accounting rules are unlikely to take hold. A FASB research project on the disclosure of intangibles was “deactivated” in October 2003, and removed from the organization’s agenda in January 2004. Scanning through the 62 letters of comment posted on the FASB Web site, it’s easy to see why. Environmental groups and some investors praised the new rules for their openness; several corporations excoriated their “subjectivity.” Business unit leaders don’t really want outsiders (or even their own CEOs) scrutinizing intangible investments, which are traditionally left to their discretion. And although many CEOs espouse the value of paying attention to intangibles, it does represent another significant drain on their time.

Yet the hurdles and resistance to accounting reforms don’t discourage Professor Lev. Indeed, he seems cheerful about the reform’s long-run prospects. After all, he says, such simple data as sales and cash flow were once routinely hidden from outsiders, until stock exchange rules forced companies to disclose them. If he’s right, then sooner or later regulators — or perhaps companies themselves — will force a similar kind of switch concerning the value of nonphysical assets. Even in the history of accounting, stranger things have happened.

Reprint No. 04203

Author Profile:

Art Kleiner ([email protected]) is the “Culture & Change” columnist for strategy+business. He teaches at New York University’s Interactive Telecommunications Program. Mr. Kleiner is the author of The Age of Heretics (Doubleday, 1996) and Who Really Matters: The Core Group Theory of Power, Privilege, and Success (Currency Doubleday, 2003). His Web site is
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