Happy New Year
If our greeting for the new year appears weak, we believe you'll understand. 1990 started with optimism about the decade ahead. There was so much promise: the Berlin wall was down, Eastern European countries were switching to market economies, everyone was discussing the peace dividend and how to spend it, and Gorbachev earned the Nobel Peace Prize. Economists were predicting inflation to continue at low levels and many thought the economy was in for a soft-landing.
But as the year closed, we saw our soldiers in the desert and the long road ahead for Eastern European countries to reestablish viable economies. The 5th International Accounting Conference in Jerusalem scheduled for November was postponed until 1991 and the S&L bailout, budget reduction process, and "yes new taxes" churned sourly in the healthiest stomachs.
Many accounting firms, both large and small, underwent major belt tightening. The seasonality of the business continued to tax the skills of managements, who in desperation reduced staffs to perhaps unhealthy levels and even made across-the-board salary reductions.
State and city governments faced sharp declines in revenues, and job freezes, pay cuts, and layoffs rippled through local economies.
Even on the standard setting side, there seemed to be floundering and turmoil. FASB 96 was amended again; FASB, on a 4:3 vote, said that postretirement benefits other than pensions should be accrued over the period of eligibility and not to expected date of retirement; the AICPA proposed limited liability corporations only to learn the benefits were not that promising; FASB had difficulty finding a replacement member at $290,000 per year and the FASB vote was changed to a super-majority of 5:2.
Recommendations for change to AICPA governance and structure were passed off to an evaluation and implementation committee, perhaps never to be heard from again, and quality review began without enough reviewers. …