FASB Chair Russell Golden Outlines Priorities for Second Term

By:
Chris Gaetano
Published Date:
Dec 7, 2016
ChangesAheadSquare

Russell Golden, who was re-appointed chair of the Financial Accounting Standards Board (FASB) in November, outlined his priorities for his next term during a speech he gave yesterday at an AICPA conference. He spoke of his priorities in terms of five I's: improvement, Implementation, Inclusion, Ideals, and International. 

In this regard, he said the board intends to continue improving GAAP through issuing final standards on hedging and insurance, the remaining convergence projects that the board undertook with the International Accounting Standards Board to produce a set of standards on major financial topics that could easily translate from one board's system to another. The hedging standard is meant to simplify the requirements related to hedge accounting, allow for its use under a broad range of financial and nonfinancial risk management strategies. The insurance standard, meanwhile, is intended to improve existing recognition, measurement and disclosure requirements as well as provide more useful information about the amount, timing and uncertainty of cash flows. The insurance standard is expected to be released by first quarter 2017, while the hedge accounting standard is expected by the end of 2017. 

He added that the FASB also expects two new simplification initiative projects (meant to reduce complexity and increase user-friendliness of certain accounting standards) within the next year. One is final guidance on determining the current versus noncurrent balance sheer classification of debt, while the other is supposed to improve accounting for nonemployee share-based payment awards issued by public and private companies. 

"To ensure that these standards result in the intended improvements, we’re going to
continue efforts to monitor and assist in transition—and we are prepared to address issues that may arise in their implementation. While it’s too early to predict what
those issues might be, we stand ready to provide insight where appropriate," said Golden. 

Golden also stressed further efforts to promote inclusiveness in the FASB agenda. He noted that not all stakeholders are technical accountants, and so the board has made strides to provide a clearer, more big-picture view of its activities as a way to include a wider variety of stakeholders in the dialogue. This is part of what he said is a cultural evolution that has taken place on the board, which includes a shared understanding of the differences between public, small public, nonpublic, and not-for-profit entities. With this in mind, he said that the FASB's Small Business Advisory Committee will shift its focus to smaller public companies, given the Private Company Council's effectiveness in providing private company input. He also said that the FASB will work more closely with its Investor Advisory Council next year, with the IAC advising the FASB on general issues like disclosure framework and hedging as well as emerging trends. 

He also talked about the feedback the board received from a recent Invitation to Comment, where stakeholders were asked what the FASB's priorities should be going forward. Golden said that in response to this feedback the board plans to focus on improvements to liabilities and equity, financial performance reporting, and pensions. He also noted, though, that some stakeholders expressed concern about the pace of the FASB's guidance, worried about whether they'll have time to absorb all the new guidance in recent years. 

While he was not forthcoming on specific dates, he also said the FASB intends to continue its work on two conceptual framework projects, one about measurement concepts and another about presentation concepts, neither of which he said have been adequately addressed in the current framework. Part of its work, he said, will be assessing how technology is influencing the delivery and consumption of financial information. 

"Technology gives us our greatest opportunity to improve financial reporting. Over the
next few years, we will focus on figuring out how financial reporting can keep pace with
advances in technology so that investors get more relevant information, more quickly.
We’re already seen the possibilities with XBRL," he said. 

Finally, Golden said that the FASB will continue to engage with the IASB, as well as other national standard setters, saying that he expects there to be joint meetings in 2017 to talk about priorities and future initiatives. 

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