More of this Feature • Part 1: How Revenue is Inflated • Part 2: What's Being Done

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Related Resources • How to Analyze a Balance Sheet • The Bottom Line • Fifteen Terms Every Investor Must Know

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Avoiding Further Accounting Abuses

The FASB (the Financial Accounting Standards Board which controls the accounting rules in the United States) and the SEC are looking into the recent slew of revenue inflation.  There are several options available to stop this kind of behavior in the future, with the most likely being a change in the way the FASB requires companies account for revenue; to date there are no regulations or guidelines.

What You Can Do

For the average investor, the most powerful course of action is to write the FASB Board (you can contact them here) as well as your local Congressman.  Until there is substantial pressure on politicians and business leaders, there is little possibility that changes in revenue accounting will occur.   

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