Fink, the magazine’s deputy editor, writes: “The usually dependable New York Times business reporter Floyd Norris commits the same error in his column today that I did a few months ago while researching a piece about finite insurance. (Hey, nobody’s perfect.)
“Neighbor Floyd says that FASB’s rules on special-purpose gizmos (SPGs; now known as variable interest doo-hickeys) used to require outside investors to put up at least 3 percent of total capital for the assets to be taken off the SPG sponsor’s balance sheet. But that’s not quite right, as a FASB staffer vociferously reminded me. Just as with the 1 percent rule of thumb used by the insurance industry for risk transfer, the 3 percent rule in SPG land wasn’t FASB’s. Instead, it was a common practice that took effect because the actual standard was vague (excuse me, I mean principles-based). At least my error didn’t get into print.
“But Floyd’s main point is still valid: that the near-term future of accounting may depend on whoever succeeds Katherine Schipper on the seven-member FASB board. And the board’s appointers, the Financial Accounting Foundation, is playing that card close to its vest. So stay tuned.”
This is when you know you’ve hit the top of the business journalism profession when you get criticized for how you describe arcane accounting rules.