"Most of the questions we get from a cash-flow point of view are really trying to get at reconciling 'Why is your growth in cash flow different from your growth in earnings,' and the [direct] method really helped lay that out. It shows you whether extra cash is going into working capital or wherever. You lose that with the direct method."

"Candidly, from a user's perspective, I think this is at least one step back and maybe more than one step back," said Bridgman. "From a preparer's point of view, it's a huge burden. If I look at the systems we've got, the consolidation system is designed to extract period-end or month-end balances, not to extract all the transactions in the middle that you need to prepare the direct method. It has got to be in the tens of millions of dollars to develop a system that would extract transaction-level data into consolidation."

Moody's Jonas and FASB member Marc Siegel both conceded that the use of the direct method would be costly, though Jonas disputed Bridgman's characterization that the direct method had no value, saying it would prove useful to analysts. Both Jonas and Siegel stressed that it was important for FASB to finish its field testing and for companies to weigh in on the costs before condemning the proposal as too costly.

• « previous
• 1
• 2