As he prepares to start the second of his two three-year terms as FASB’s chairman, Russell Golden said the board has gotten the message that the pace of change needs to slow down.
FASB recently asked the public for input on what its agenda priorities should be in the coming years.
“Some stakeholders opined that we should slow down on new projects until they’ve had the chance to absorb new guidance issued in recent years,” Golden said Tuesday at the AICPA Conference on Current SEC and PCAOB Developments.
Recently issued standards on high-impact issues such as revenue recognition, leases, and credit losses have company financial statement preparers and accounting firm personnel working hard to make a successful transition.
Some of their comment letters displayed those concerns about the pace of change:
- “We believe that standards setters and regulators should explicitly consider this problem when deciding whether standards and rules really need to be changed, and if so, when,” BDO USA LLP wrote.
- “We believe the Board should consider the volume of recently issued Accounting Standards Updates … and the resulting significant changes to accounting and financial reporting that companies will be investing a significant amount of time and expense in implementing and understanding over the next several years,” a BB&T Corp. comment letter read.
- “Preparers and stakeholders are challenged by the need to allocate their limited resources to the implementation of the major projects recently completed by the FASB,” Alison Yara, vice president, accounting policy and financial reporting for IBM, wrote.
Golden said FASB is carefully considering those comments. On Dec. 16 at its offices in Norwalk, Conn., FASB will hold a public round table discussing the feedback it received on its agenda consultation, including how to manage the pace of change while continuing to improve GAAP.
One way Golden said FASB intends to help preparers is by assisting with implementation concerns. A transition resource group was created for the credit losses standard while it was in draft form to improve confusing words and phrases before the standard was released.
“We are prepared to address issues that may arise in [standards] implementation,” he said. “While it’s too early to predict what those issues might be, we stand ready to provide insight where appropriate.”
That doesn’t mean FASB will stop standard-setting activities entirely. By the end of 2017, Golden expects the board to issue a standard that would permit hedge accounting for a broader range of financial and nonfinancial risk management strategies.
Golden also expects the board to complete in 2017 a standard on long-duration contracts issued by insurance organizations, such as life insurance and annuities. FASB also is doing research to determine what the board’s intent was with respect to Criterion D of the board’s definition of a public business entity. The board’s staff is trying to determine how broad the board intended Criterion D to be, according to Sue Cosper, FASB’s technical director.
But as FASB considers its next steps, the issue of standards and regulatory overload is top of mind.
“What we need to do is determine what are the types of projects we’ll work on in the future and what is the pace of those projects, considering what is the degree of change that’s currently in the system,” Golden told reporters after his speech. “And that’s what we’re going to be discussing.”
—Ken Tysiac (firstname.lastname@example.org) is a JofA editorial director.