By Erik Bradbury
Simplification, their 2017 agenda and board composition were among the topics highlighted by the chairs of the Financial Accounting Standards Board and the Emerging Issues Task Force at FEI's Current Financial Reporting Issues Conference.
On Monday, FASB chair Russell Golden, and EITF chair and FASB Technical Director Susan Cosper sat down with Kenny Bement, Controller, Alphabet Reporting and Governance, to discuss the FASB’s current standard-setting agenda and other topics.
Culture Change – A continuous process
In an effort to reduce complexity and simplify the accounting standard regime, the Board has been focused on changing the FASB’s culture and procedures. Highlighting the focus, Golden noted, “We want to make sure investors are getting better information, but sometimes there are similar ways to get that better information to investors.”
Golden cited the new lease accounting standard as an example. The improvement was to put leases on the balance sheet and provide transparency about lease obligations of lessees, but the approach the Board took (through its due process and the extensive outreach associated with two exposure drafts) was to maintain the distinction between capital (referred to as “finance” in the new standard) and operating leases for income statement and cash flow purposes, which allowed for a less complex transition for preparers to get investors the information they need.
FASB Future Agenda
The FASB recently released an invitation to comment on its future agenda and offered four potential topics to consider:
Intangible Assets (including research and development)Pensions and Other Postretirement Benefit PlansDistinguishing Liabilities from EquityReporting Performance and Cash Flows
The Board received numerous comments from stakeholders and plans to engage in a series of roundtables to focus on whether these topics are financial reporting issues, and should be added to the formal agenda as major FASB projects.
Acknowledging that a lot of preparers have asked for more targeted changes and that there is a lot of noise in the system, Golden and Cosper noted the Staff and Board will think about those considerations going forward while also acknowledging the FASB does not have the resources necessary to take on all four projects at the same time.
Based on the comments received to date, individual stakeholders believe different topics should be addressed...