FASAC Survey Identifies Top Five Projects for FASB
By Jason Bramwell
The primary advisory group for the Financial Accounting Standards Board (FASB) on September 17 released results of a recent survey that solicited stakeholder views about the standard-setting board's future agenda, including the top five projects the FASB should pursue in the next three to five years.
The 2013 survey, which was conducted by the Financial Accounting Standards Advisory Council (FASAC), whose role is to advise the FASB on future project priorities and on possible agenda items, provided FASB stakeholders with the opportunity to share their views on projects and areas they believe are the most important for the board to address in the future.
The eighteen-question survey, which was available on the FASB website, also asked FASAC and other FASB advisory group members, FASB members, and other interested constituents for their views on the FASB's future technical agenda, key areas of suggested focus, and other related initiatives and efforts.
"The FASAC survey provides important feedback to the FASB on where to focus our efforts – both now and in the future – in our mission to reduce complexity and improve the relevance of financial reporting for both public and private companies," FASB Chairman Russell Golden said in a written statement. "The results of the 2013 FASAC survey are a valuable source of information about what our project priorities should be and will help guide our decisions about where to deploy resources to address issues stakeholders have told us are most urgently in need of improvement."
Based on the responses of 105 people who completed the survey, the top five projects that should be on the FASB's agenda for the next three to five years were:
- Disclosure framework (15 percent)
- Accounting for financial instruments: hedging (13 percent)
- Conceptual framework (9 percent)
- Financial instruments with characteristics of equity (7 percent)
- Pensions and financial statement presentation (tied at 6 percent)
The three primary reasons why respondents thought the FASB should undertake the top priorities mentioned were that:
- Simplification is needed.
- Better information is needed.
- Current information does not provide decision-useful information to investors and other users of financial reports.
Approximately half of the responses (52.5 percent) indicated the need to resolve one or more potential projects within the next twenty-four months. The projects that seemed to garner the most comments in this area were:
- Conceptual framework
- Disclosure framework
- Financial instruments (including liquidity and interest rate risk, derivatives, alternative nonmarket instruments, and hedging)
Respondents commented about whether a specific sequencing is needed and whether any of the projects should be conducted in phases. Thirty-five percent of respondents did not indicate a need for specific sequencing or for phasing. Those who did support sequencing or phasing most frequently commented about the need for the FASB to address the "foundational projects" before other major projects. The projects respondents considered foundational include:
- Conceptual framework
- Disclosure framework
- Financial statement presentation
- Other comprehensive income
Of those projects, conceptual framework was suggested as a needed precedent most frequently.
About half of the respondents support the removal or deferral of an active FASB project for the next three to five years. The project suggested most frequently by preparers and other stakeholders for deferral is accounting for financial instruments: liquidity and interest rate disclosures.
About 50 percent of respondents support the reorganization or enhancement of the FASB Accounting Standards Codification. The stakeholder group with the strongest level of support for reorganization or enhancement among the respondents is accounting firms and auditors; 71 percent of respondents from accounting firms responded that the codification should be enhanced.
"While opinions varied on specific projects and issues, FASB stakeholders agreed that simplifying standards and improving the relevance of information that results from those standards should be among the board's top priorities," said FASAC Chairman Charles Noski.
About the survey:
The FASAC received 105 responses for its 2013 survey. Responses included thirty-one current FASAC members; thirteen current members from other FASB advisory groups (including members of the Not-for-Profit, Investor, and Small Business Advisory committees as well as the Private Company Council); six FASB board members; and fifty-five other stakeholders.
Respondents represented a diverse population of FASB stakeholders, including preparers (38 percent), accounting firms (22 percent), users (12 percent), academics (8 percent), industry organizations (6 percent), and others (14 percent).
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