Archive for April, 2012
By: Samantha White, Associate, The Global Business Law Review
Recently, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) made yet another effort to show their dedication to one set of globally accepted financial reporting standards. It resulted in an exposure draft published on November 14, 2011 entitled Revenue from Contracts with Customers. The collaborative standards may supersede all previous international and local reporting standards regarding revenue recognition as early as January 1, 2015. The new rules set forth clarified principles for recognizing revenue from the original draft released in June, 2010 and ensure the standards will be consistently applied in different transactions and industries. As imperative as revenue is in assessing a company’s success and viability, the differences in international and U.S. standards make it a challenge to compare the two results.
The two standard-setting boards first realized that both the current international standards and U.S. standards resulted in inadequate information being relayed to investors in order to understand the judgment and estimates used by a company in getting to their financial results. Specifically, international standards contain too limited of guidance for complex transactions often resulting in applying U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) in certain situations. Due to the specificity of industry regulations under U.S. GAAP, a similar transaction across industries may vary in results. The framework proposed by the FASB and IASB in the draft would solve these problems and revenue will be recognized when it reflects the transfer of promised goods or services in an amount the transferor expects to receive for those goods or services.
For an example on reactions to the draft, one of the biggest accounting firms in the world, PricewaterhouseCoopers, commented by making suggestions to amend the details of the standards, but the firm showed their overall support for the goal of one set of revenue recognition standards and the effort that both the standard setting boards put into addressing comments from the original exposure draft. The comment period for Revenue from Contracts with Customers ended on March 12, 2012.
 See generally Financial Accounting Standards Board, Financial Accounting Series Exposure Draft Proposed Accounting Standards Update, Revenue From Contracts with Customers, (Nov. 14, 2011). http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175823564392&blobheader=application%2Fpdf
 International Accounting Standards Board, Snapshot: Revenue from Contracts with Customers, 20 (Nov., 2011) http://www.ifrs.org/NR/rdonlyres/DE497799-E21E-4C74-9B33-07ACBA16A175/0/Snapshot_RevRec2_Nov2011.pdf.
 See id. at 1.
 See id. at 2.
 See id.
 See id.
 See id. at 4.
 PricewaterhouseCoopers, Exposure Draft – Revenue from Contracts with Customers (March 12, 2012) https://pwcinform.pwc.com/inform2/show?action=informContent&id=1221144003151454.
 International Accounting Standards Board, supra note 2, at 1.
By: Evan Bishop, Associate, The Global Business Law Review
Fact met fiction recently when a bastion of journalistic integrity, This American Life, broadcast parts of a one-man show that purportedly exposed further abuses of Chinese laborers by factories manufacturing iPads and iPhones for Apple. The episode, entitled “Mr. Daisey and the Apple Factory,” featured parts of Mike Daisey’s monologue that allegedly described his visits to Chinese factories and interactions with Chinese workers. The episode aired in January and quickly became This American Life’s most popular podcast, boasting more than 888,000 downloads. In the wake of the broadcast, reporters for radio and print outlets fact-checked Mr. Daisey’s claims to determine their validity and found that, in fact, some of Mr. Daisey’s assertions were fabrications.
On March 16, 2012, This American Life retracted the story due to the “dubious” nature of some of Mr. Daisey’s claims, leading to yet another media blitz about Chinese factory conditions. Mr. Daisey has defended his show by claiming that he is a performer and that theater or drama is very different from journalism. This is despite the fact that his show is billed as “nonfiction” and that he never warned This American Life that the monologue contained inconsistencies. Journalism and theater are two different entities; one with the intent to inform and the other with the intent to entertain. Drama is not to be confused with reality nor is it to be considered news.
The poor working conditions in Chinese factories are likely a result of the “race to the bottom” culture of manufacturing. The “race to the bottom” is a practice wherein countries, in an effort to have the cheapest labor costs, ignore labor and employment standards to attract foreign companies shopping for cheap labor and manufacturing opportunities. By competing against one another to give the lowest bid, Chinese manufacturers are creating environments where the workers are forced to sign pledges that they will not commit suicide and where nets to thwart suicide attempts surround workers’ dormitories. Some critics are concerned that the altered facts and exaggerations in Mr. Daisey’s show may ultimately undermine the cause of improving working conditions in Chinese factories. Most hope that the attention garnered by “Mr. Daisey and the Apple Factory” will serve to increase the public’s awareness of poor working conditions and labor abuses in China. Any attention, whether positive or negative, will help increase public awareness of the poor working conditions and labor abuses in China and encourage reform.
 David Carr, Theater, Disguised as Real Journalism, N.Y. Times (Mar. 18, 2012), available at http://www.nytimes.com/2012/03/19/business/media/theater-disguised-up-as-real-journalism.html.
 ‘This American Life’ Retracts Apple Mike Daisey China Show, BBC (Mar. 16, 2012)., http://www.bbc.co.uk/news/technology-17405011.
 Mike Daisey Blames Other Journalists for Not Challenging Fabricated ‘This American Life’ Story, Huffington Post (Mar. 21, 2012), available at http://www.huffingtonpost.com/2012/03/21/mike-daisey-other-journalists_n_1370057.html.
 Charles Isherwood, Speaking Less Than Truth to Power, N.Y. Times (Mar. 18, 2012), available at http://www.nytimes.com/2012/03/19/theater/defending-this-american-life-and-its-mike-daisey-retraction.html?_r=1&ref=foxconntechnology.
 Yin Lily Zheng, It’s Not What is on Paper, But What is in Practice: China’s New Labor Contract Law and the Enforcement Problem, 8 Wash. U. Global Stud. L. Rev. 595 (2009).
 Id.; Tim Worstall, Is This Apple’s Nike Moment?, Forbes (Mar. 6, 2012), available at http://www.forbes.com/sites/timworstall/2012/03/06/is-this-apples-nike-moment/.
 You are NOT Allowed to Commit Suicide: Workers in Chinese iPad Factories Forced to Sign Pledges, MailOnline (May 1, 2011), http://www.dailymail.co.uk/news/article-1382396/Workers-Chinese-Apple-factories-forced-sign-pledges-commit-suicide.html.
 Carr, supra note 1 (citing Max Fisher, Worse than Kony2012: The Tragedy of Mike Daisey’s Lies about China, The Atlantic (Mar. 16, 2012), available at http://www.theatlantic.com/international/archive/2012/03/worse-than-kony2012-the-tragedy-of-mike-daiseys-lies-about-china/254640/).