From the Chairman's Desk
By Russell G. Golden, FASB Chairman
Last month, I had the privilege to address more than 6,000 members of
the SEC Professionals Group, an informal community of professionals who
actively prepare and file financial reports with the U.S. Securities and
Exchange Commission.
Our greatest challenge—and our greatest opportunity—is in setting the FASB's future agenda.
During
the webinar, I was asked what I consider to be the greatest challenge
facing the FASB—and what I consider to be the FASB's greatest
opportunity.
My answer to both questions is the same. Our greatest challenge—and our
greatest opportunity—is in setting the FASB's future agenda.
As I've said in the past, a big part of successful standard setting is
identifying the right problems. That requires determining if the problem
can, in fact, be addressed with a standard setting solution.
Before that process gets underway, an even more important question we
must ask ourselves is: do our stakeholders think the problem should be a
priority for the Board?
With some of our major projects winding down, our focus is on answering
that question. Last spring, the Financial Accounting Standards Advisory
Council (FASAC) conducted a survey of its members—as well as members of
our other advisory groups, the Emerging Issues Task Force (EITF) and
the Private Company Council (PCC)—to find out what additional issues we
should tackle in 2016 and beyond.
You may recall that the FASAC did a similar survey in 2013, in which
respondents identified our current areas of focus, including the
Simplification Initiative, and the Disclosure Framework, Hedging, and
Conceptual Framework projects.
Similar to 2013, we started this process with advisory groups because
they are a small but representative cross-section of our stakeholder
universe. Members of these groups are drawn from investor groups,
including buy-and sell-side investors in the areas of equity, rating,
and lending; accounting firms ranging from the "Big Four" to small
regional firms; CFOs and chief accounting officers; private company and
not-for-profit organization preparers; academics; auditors; members of
the legal community; and others.
It's important to note that
not all stakeholder groups agreed on all priorities. For example,
segment reporting was the top priority for investors, but ranked last by
preparers.
As part of the survey, advisory group members were asked to weigh in on the following questions:
- What are the most needed financial reporting improvements and why?
- Related to that, what is the problem and what are feasible alternatives?
- When is the solution needed, and for whom?
From the more than 80 responses we received, we learned that, overall,
advisory group members ranked the following five projects as top
priorities for the Board:
- Financial performance reporting
- Improving cash flow classification
- Pensions and other post-retirement benefits
- Liabilities and equity
- Intangible assets (especially important to the technology industry).
It's important to note that not all stakeholder groups agreed on all
priorities. For example, segment reporting was the top priority for
investors, but ranked last by preparers.
(A more detailed breakdown of the top five projects by stakeholder groups is available in the chart below.)
We plan to share the full survey results in a public meeting held during the first quarter of 2016.
These findings are just a starting point, not the final word. That's where you come in.
During the first half of 2016, the FASB expects to issue a Discussion Paper on what we learned from the survey.
During the first half of 2016, the FASB expects to issue a Discussion
Paper on what we learned from the survey. The Discussion Paper will more
fully describe the top areas of concern identified in the survey
results, further articulate the identified problems, and present
possible solutions.
More importantly, it will provide you, our stakeholders, an opportunity
to tell us whether you agree or disagree on the areas of improvement we
have identified—and why.
The Discussion Paper also will ask you what you think are other
potential issues we should consider, as well as how you'd prioritize
them. In other words, we want to know what important "big-ticket" items
you think we should—and shouldn't—consider in the future.
To develop the right
solutions, we must first identify the right problems. And that means
listening, carefully, to your experiences, input, and concerns.
To
develop the right solutions, we must first identify the right problems.
And that means listening, carefully, to your experiences, input, and
concerns.
Your feedback also will help us better understand what concerns dovetail
with those of our international counterparts and whether there's an
opportunity to work toward converged solutions.
Our agenda review coincides with a similar review underway by the
International Accounting Standards Board (IASB). We did this because we
may discover our respective stakeholders share common concerns,
allowing us to identify opportunities to work together on major issues
of mutual importance.
As always, your input during this process will help ensure the Board
directs its time and resources to solving the accounting problems that
are most important to you. I thank you in advance for continuing to
share your views on our agenda priorities.