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Columbia Business School established the Center for Excellence in Accounting and Security Analysis in 2003 under the direction of Trevor Harris and Professor Stephen Penman. The Center ("CEASA") aims to be a leading voice for independent, practical solutions for financial reporting and security analysis, promoting financial reporting that reflects economic reality and encourages investment practices that communicate sound valuations. CEASA's mission is to develop workable solutions to issues in financial reporting and accounting policy; produce a core set of principles for equity analysis; collect and synthesize best thinking and best practices; disseminate ideas to regulators, analysts, investors, accountants and management; and promote sound research on relevant issues. Drawing on the wisdom of leading experts in academia, industry and government, the Center produces sound research and identifies best practices on relevant issues. CEASA's guiding criterion is to serve the public interest by supporting the integrity of financial reporting and the efficiency of capital markets. Located in a leading university with a mandate for independent research, CEASA is positioned to lead a discussion of issues, with an emphasis on sound conceptual thinking and without obstacles of constituency positions. More information and access to current research is available on our website at http://www.gsb.columbia.edu/ceasa The Center is supported by our generous sponsors: General Electric, IBM and Morgan Stanley. We gratefully acknowledge the support of these organizations that recognize the need for this center.

Current accounting practice expenses many investments in intangible assets to the income statement, confusing earnings from current revenues with investments to gain future revenues. This has led to increasing calls to book those investments to the balance sheet. Drawing on relevant research, we evaluate solutions for intangible asset accounting that contrast with balance sheet recognition, and we compare these with current practice under IFRS. Key is acknowledging that an accounting solution comes from a double-entry system, which produces both an income statement and a balance sheet, and which has features that both enable and limit the information that can be conveyed about intangible asset value. In this system, asset recognition in the balance sheet must consider the effect on measurement in the income statement, for the income statement conveys value added to investment on the balance sheet. A determining feature is uncertainty about investment outcome and how that affects the income statement, so our solutions centre on accounting under uncertainty. Two other accounting features are added: there has to be an investment expenditure for balance sheet recognition, and that expenditure must be separately identifiable from transactions. These features, rather than the tangible-intangible asset dichotomy, lead to the prescribed solutions.

In the 2011 monoclonal antibody monograph revision, European Pharmacopoeia experts acknowledged that protein products may also contain proteinaceous particles at release or that protein particles may form during storage. Indeed, industry experience has demonstrated that therapeutic proteins such as monoclonal antibodies can exhibit a propensity for self-association leading to the formation of aggregates that range in size from nanometres (oligomers) to microns (subvisible and visible particles). As a result, the requirement for drug product appearance for monoclonal antibodies was changed from "without visible particles" to "without visible particles unless otherwise authorised or justified". In our view, "practically free from particles" should be considered a suitable acceptance criterion for injectable biotechnology and small-molecule products, as long as appropriately defined. Furthermore, we argue that visual inspection is a suitable quality control release test and that "practically free from particles" is a suitable specification when adequately described.

SYNOPSIS: This paper contributes to the development of a “Conceptual Framework for Financial Reporting” as currently being undertaken by the International Accounting Standards Board (IASB). Building on the ideas of “asymmetric prudence” and the business model, it contrasts “value added” and “price change” businesses and argues that an entry price is appropriate for the operating assets of the former kind of business while a current market value is appropriate for the latter. It notes that both historical cost and current cost are entry values. While accepting that historical cost is likely to continue to be widely used, it questions whether the Conceptual Framework should preclude the use of current cost, and argues that if current cost is to be used, then the cost of consumption should be reported separately from holding gains and losses. The paper advocates the reporting of operating income, and discusses what items of income and expense should be reported in other comprehensive income rather than in profit or loss. It questions whether all such items should be “recycled” to the statement of profit or loss in a later accounting period.