A New Look and Feel for Financials?

Now that it has upheld fair value accounting, the SEC is pushing the FASB and the IASB to complete a two-year-old Financial Statement Presentation Project.

This is according to CPA Dina Maher, the head of U.S. accounting research for FitchRatings’ Credit Policy Group, who detailed the project and its next steps at a meeting of the NYSSCPA’s Banking Committee today.

“The SEC has shown they’re willing to pressure the standard setters … if they think it’s in the public’s best interest,” Maher said. “The FASB and IASB have to move quickly now with the SEC saying ‘go get this done.’”

To that end, she said, testing is already underway at a few companies and an exposure draft is pending its completion. In addition, a joint discussion paper was released in October on the project, with a comment period open until April 14.

The project would substantially restructure the way information is presented in financial statements, with a new focus on making information more interactive and user-friendly. “The objective is to create a standard that requires entities to organize financial statements in a manner that clearly communicates an integrated financial picture of the entity,” the IASB said in a statement.

The project includes a management approach model that Maher said shows “this is really written in IFRS mode.”

That's not terribly surprising. Two recent developments -- the SEC's decision to uphold fair value accounting and its mandate that large companies use XBRL tagging -- are in line with a shift toward IFRS.

She called on members of the committee to express concerns and comments to the FASB or IASB before the April 14 deadline.

“They’re really looking for insight from a variety of sources,” Maher said. “There’s a push to have more user needs taken into consideration, rather than preparer or auditor needs.”

Previously, “user needs have not necessarily been paramount,” she said. But the recent upheavals in both the economy and financial sector have shifted the focus to the users’ needs: interactive, more transparent financial information.

Want to know more about this? Read the full story in today's weekly NYSSCPA E-zine and in the March 1 issue of The Trusted Professional. Maher's full presentation is also attached and can be downloaded as a pdf.

You can also view the comment letters received by the FASB thus far or read a plain-language explanation.