From the Chairman's Desk
By Russell G. Golden, FASB Chair
How the FASB Addresses Implementation Issues
An important part of the FASB's mission of developing a high-quality
standard is monitoring its implementation and assisting preparers and
other practitioners in their understanding and ability to consistently
apply a new standard. Our goal is to be in position to help our
stakeholders and facilitate a smooth transition.
To position organizations to have a successful transition to our
standards, we undertake a variety of initiatives focused on educating
our stakeholders, helping preparers and practitioners interpret the
standards, and making any necessary clarifications to the standards to
address unintended consequences, if any.
In this column, I would like to specifically focus on three of our educational initiatives:
- Conducting outreach with stakeholders
- Working with Transition Resource Groups (TRG), and
- Addressing stakeholders' technical questions.
Stakeholder outreach is a key component of our standard-setting process.
Our stakeholders generally are familiar with the many ways we perform
outreach when creating and finalizing a new standard. But our outreach
does not end when the standard is issued.
Our outreach does not end when the standard is issued.
This continuing outreach serves two purposes: first, to educate
stakeholders about the standard, and second, to understand what
implementation-related questions are out there—especially those that are
reoccurring. We view this as an important element of our process, which
helps us understand if application of a new standard is consistent with
what the Board intended.
Types of Board and FASB staff outreach include:
This proactive approach helps us learn about implementation concerns firsthand so that we can address them efficiently.
- Meeting individually with preparers, auditors, and regulators
- Addressing preparer organizations in affected industries through small group meetings
- Issuing "Plain-English" educational materials such as videos, articles, and fact sheets
- Discussing implementation progress with FASB's advisory groups
- Presenting at conferences to explain the new standard
- Participating in CPE provider training sessions to train them on
how to educate their stakeholders about the standard (we call this
"training the trainer"), and
- Conducting our own CPE webcasts aimed at preparer and auditor audiences.
Transition Resource Group
When the FASB issued the revenue recognition standard in 2014, we created our TRG (which you can read about in another article in this issue)
to solicit, analyze, and discuss implementation issues arising as
companies review and implement the standard. The group continues to
inform the Board about those issues, which helps us determine what
action is needed to address them.
Based on that successful model, we created the credit losses TRG with one difference: this time, we formed the TRG before the standard was issued, not after.
We plan to replicate this proactive approach for some, but not all future standards. Forming a TRG early will help us:
- Avoid having to make revisions to the standard after it is issued
- Reduce diversity in practice, and
- Proactively address preliminary cost-benefit concerns.
We believe the TRG is most useful for comprehensive standards that have significant and broad changes.Additionally,
a TRG provides stakeholders with a forum to learn about a new standard
from others tasked with implementing it, such as financial statement
preparers, auditors, users, and regulators.
Finally, and perhaps most importantly, a TRG enables stakeholders to
submit potential implementation issues for public discussion—and enable
the group to address issues that likely will be faced by many other
We do not expect to create a TRG for all future projects. We believe the
TRG is most useful for comprehensive standards that have significant
and broad changes.
The FASB stands ready to address questions and concerns about implementing our standards—both before and after they are issued.Comment
letters and other stakeholder communications are critical to our
ability to come up with the best standard-setting solutions. They also
are important to helping us root out implementation issues that arise
after a standard is issued.
Our Technical Inquiry service
makes it easy for stakeholders to submit questions. In addition to
addressing individual concerns, this service helps us identify
reoccurring questions, themes, and issues that may need to be addressed
more broadly. The service also helps our stakeholders obtain input on
applying our standards to their specific circumstances.
Through outreach, TRGs, and responsiveness to technical inquiries, the
FASB stands ready to address questions and concerns about implementing
our standards—both before and after they are issued.
As always, we are committed to continuing our dialogue with stakeholders
throughout the entire process and ensure a successful transition. In
the end, your input can help us develop operational standards that
provide financial statement users better information.