Global standard setting is taking a new path and U.S. accounting standard setters are preparing to consider foundational projects, according to forward-looking information published Thursday in the annual report of the Financial Accounting Foundation (FAF).
Board chairmen Russell Golden of FASB and David Vaudt of GASB, whose organizations are overseen by FAF, provided their perspective in the report. Here are some of the key points:
Shift in convergence. FASB’s top priority for 2014 is bringing the international convergence projects on revenue recognition, financial instruments, and leases to a conclusion, according to Golden. FAF acknowledged that FASB and the International Accounting Standards Board (IASB) may take different paths on financial instruments, leases, and insurance. With the convergence projects near completion, FASB plans to continue promoting global standard setting by continuing to improve GAAP, assisting the IASB in the development of IFRS through the Accounting Standards Advisory Forum, and building stronger relationships with other national standard setters.
FASB examines foundation. FASB will continue working on initiatives that have an overarching impact on GAAP such as its conceptual framework and disclosure framework projects. Standards-level initiatives include a newly added project on government assistance disclosures. A third category of projects is designed to reduce the cost and complexity of financial reporting while improving its relevance for financial statement users.
GASB examines complexity and timeliness. GASB is examining ideas for enhancing its financial reporting model while reducing the complexity of financial reporting, according to Vaudt. The board also will consider what it can do to improve the timeliness of state and local government financial reporting. As implementation of the board’s new pension standards continues, GASB intends to issue highly anticipated proposed standards on other postemployment benefits this year.
FASB/GASB collaboration. The boards intend to increase their collaboration on projects with similar underlying economics. Leases will be one focus of that effort, according to Golden, as FASB and GASB share what they have learned in hopes of helping each other make better standard-setting decisions.
Ken Tysiac (
) is a JofA senior editor.