FASB Challenged With Prioritization

In part five of this exclusive JofA interview, FASB Chairman Leslie Seidman shares her challenges of prioritizing projects.

JofA: What’s been the greatest challenge so far as chairman, and what do you expect your greatest challenge to be over the course of the next year?

Seidman: It became clear last fall, or a little before that, that it was just not going to be possible for us to conduct robust, thorough deliberations on all of those [convergence] projects at the same time. So, it was going to be necessary for us to focus in on which projects were the most important, and would represent a realistic grouping of projects for us to move forward and develop high-quality standards in an expeditious manner.

So, I think one of the biggest challenges to date has been identifying, together with the IASB and then for our board alone, which are the projects we’re going to focus on and try and complete in the relative near term to try and advance and improve financial reporting for U.S. investors and also for global investors.

The reason it’s been a challenge is that everything is considered important by somebody. So, I’ve been trying to make it clear that, while we’ve deferred work on some of these projects that are important to many people, it’s not as though we have stopped work on them. We do plan to resume them in the future after we have made some progress and completed some of those other higher-priority projects.

In terms of the challenges going forward, I think after we have completed work on these highest-priority projects, I would like to take a fresh look at the environment, let’s say later this year, and see, are there other issues that have emerged that would rank right up there as priorities with some of these other projects that we had made some progress on? So, for example, we have been hearing lately that some investors would like us to focus on pension accounting because of changes in the economy and the way that current accounting standards in the U.S. are representing that information. It is not an active project of ours right now.

So, I think it will represent a challenge to try and gather information about what are the current accounting topics that people would like us to focus on, do a reprioritization of what we think represent the most pressing issues right now, not only in the U.S., but also globally, and come up with a revised work plan going forward.

JofA: Right now there are a number of priority projects set for completion in the second quarter. So, I would assume it would be in the third or fourth quarter that you would look at reassessing priorities.

Seidman: Right. What we’re going to be looking for is completion of the [priority convergence projects with the IASB] and then any of the FASB-only projects before I’d be willing to add something new to the agenda. But, with respect to the timing, later this year I would expect us to start anticipating having some capacity to take on new projects. Before we do that, I would like to take a step back and gather this information, as I said, and then determine what our priority is going to be going forward.

JofA: How would you describe your vision for your term as chairman?

Seidman: We have had a change in the leadership of the organization, but we have had no change in terms of the commitment to the mission and priorities of the FASB at this important point in time. Like my predecessor, [former FASB Chairman] Bob Herz, I am absolutely committed to trying to move forward the projects on our joint agenda with the IASB, especially those that we have most recently identified as our priority projects, and deliver to the capital markets improved, simplified and converged standards on what we perceive as the most important deficiencies in financial reporting around the world at this point in time.

We do have one other important priority. I view it as a priority to make sure that we are responding to the needs of [users of private company financial statements, as well as not-for-profit financial statements] equally to the users of the public company financial statements.

JofA: What happens after two and a half years? Could you be reappointed for another term?

Seidman: No, regardless of the capacity in which you serve on the board, you’re not allowed to serve more than 10 years. I have already served seven and a half years as a board member. So after the two and a half years as chairman, I am not eligible for reappointment.

JofA: How is FASB and its staff coping with the kind of unprecedented standard-setting volume in the time constraints that you have now?

Seidman: By really focusing in on what we want our priorities to be, we were able to redeploy a number of staff members to work on those priority projects and really beef up those teams. We have also added a number of meeting dates to the joint board calendar, relative to the “once-a-week” schedule we had for many years in the past.

So, while it’s clear that we are working very hard on these projects, I’ve tried to add resources to the projects to allocate the work a little bit better among more people. For example, we have identified certain individuals who had been working on other projects that are now viewed as lower priorities, who are helping the high-priority teams with things like implementation guidance, educational outreach materials and, in many cases, actually helping address the technical issues in the projects.

FASB Challenged With Prioritization

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