FAF Issues Report: Brave New World in Accounting

The Financial Accounting Foundation, parent body of the FASB and the GASB, has released its annual report, which includes a summary of its past year and its audited financials. The report contains detailed descriptions of the many significant developments in 2013; the essential highlights are described below.

The Foundation: New People and Policies
The FAF found itself naming new chairs to both the FASB and the GASB: Russell G. Golden and David A. Vaudt. It also appointed James L. Kroeker to the new role of FASB vice chairman. Also changed was the boards' agenda-setting process: Going forward, a majority vote of the respective boards must approve decisions on agenda projects—not just the board chair.

The foundation also made big changes on the international front. The report noted that in April 2013, FAF President and CEO Teresa S. Polley acknowledged the end of the era of "bilateral convergence" between the FASB and the IASB. However, the report did stress the FAF's and FASB's commitment to working with the IASB and the IFRS Foundation. The FAF has nominated the FASB to the Accounting Standards Advisory Forum (ASAF). This will continue "the process of improving and converging GAAP and IFRS."

The FAF also launched new logos and new websites for itself and the FASB and the GASB. The report said the new sites have easier navigation and clear explanations of major projects.  

The GASB: Endings and Beginnings
In 2013, the GASB got three final statements out the door, covering government combinations and disposals of government operations, accounting and reporting for nonexchange financial guarantees, and pension transition for contributions made subsequent to the measurement date.

It also threw a lifeline to accountants involved in pension accounting, which is about as complicated as you can get. The board has been issuing implementation guides and the report noted that pension outreach activities were a "major focus" in 2013. In related projects, the board has also been addressing other postemployment benefits (OPEB).

The FASB: Moving in New Directions
On the top of the list was the FASB's work in private-company standard setting. The FASB and Private Company Council have spent their first full year working together, and have completed a private company decision-making framework. The report says that the FASB has already endorsed PCC recommendations on goodwill and interest rate swaps. Also, it has clarified the use of the fair value disclosure exemption for private companies and nonprofits.

The FASB also is taking a stab at clarity, saying it has been working on improving the effectiveness of disclosures in notes to financial statements and reduce complexity. The report said the FASB has decided to separate its disclosure framework project into two components: its decision process and the reporting company or organization’s decision process.

And tech geeks will be particularly interested in the FASB's work in GAAP taxonomy. In 2013, the board launched a new series of XBRL implementation guides, which it says should serve as reference guides.

Looking at the Numbers
The financial portion of the report showed that the FAF got a clean bill of health from its auditors, McGladrey LLP. In the notes to the financial statements, the report explained that Sarbanes-Oxley basically funds FASB activities through accounting support fees assessed against and collected from issuers of securities. Beginning in 2012, the Dodd-Frank Act provides for funding of the GASB’s recoverable expenses—FINRA establishes, assesses, and collects accounting support fees from its members.

Related articles:

Final US GAAP Framework for Private Companies Issued by FASB and PCC
US GAAP Financial Reporting Taxonomy Green-Lighted by SEC



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