Key Messages from the SEC Roundtable Participants:

• IFRSs have held up quite well in the face of recent market turmoil. Some panelists believed that IFRSs outperformed US GAAP in many areas, such as off-balance-sheet transactions involving special-purpose entities, and have resulted in more robust, transparent disclosures.
• Improvement is needed to the fair value reporting requirements under both IFRSs and US GAAP. Some panelists specifically pointed to the requirement under FASB Statement 157 Fair Value Measurements for an entity to consider its own credit standing when determining the fair value of its liabilities, and the resulting effect on the income statement.
• Improving revenue recognition guidance under IFRSs should be a priority for standard setters.
• Consistent application of accounting standards and financial statement presentation are important to investors.
• The transition to IFRSs gives companies the opportunity to reassess their accounting policies and disclosures to ensure that their accounting reflects the true economics of the transactions and that their financial statements are sufficiently transparent.

Examples of some of the proposals relating to the design of accounting standards and the process for setting standards include:

• Fair value reporting. The SEC should recommend that the FASB be judicious in issuing new standards and interpretations that expand the use of fair value in areas where it is not already required until (a) FASB completes a measurement framework to systematically assign measurement attributes to different types of business activities and (b) the SEC, FASB, and others develop and implement a plan to strengthen the infrastructure that supports fair value reporting.
• Financial statement presentation. The SEC should recommend that the FASB consider (a) aggregating financial statements by meaningful categories of business activities, such as the operating, investing, and financing sections and (b) developing a practical means for reconciling the statements of income and cash flows by major classes of measurement attributes.
• Disclosure. Integrate existing SEC and FASB disclosure requirements into a cohesive whole based on consistent objectives and principles.
• Disclosure of risks and judgements. Require disclosure of the principal assumptions, estimates, and sensitivity analyses that may impact a company's business, as well as a qualitative discussion of the key risks and uncertainties that could significantly change these amounts over time.
• Recognition. Recognition guidance in US GAAP should be based on a presumption that bright lines should not exist.
• General vs industry accounting standards. US GAAP should be presumptively based on business activities, rather than industries. Industry-specific standards should be rare.
• Accounting policy choices. US GAAP should be based on a presumption that formally promulgated alternative accounting policies should not exist. US GAAP should be based on a presumption that similar activities should be accounted for in a similar manner.
• Scope of standards. US GAAP should be scoped with sufficient precision to minimize the use of scope exceptions.
• Investor involvement in standards. Add more investor representation to the FASB and the Financial Accounting Foundation.
• Financial Reporting Forum (FRF). Create a Financial Reporting Forum (FRF) that includes key constituents from the preparer, auditor, and investor and other user communities, to meet with representatives from the SEC, the FASB, and the PCAOB to discuss pressures in the financial reporting system overall, both immediate and long-term, and how individual constituents are meeting these challenges. This may require the FASB to re-evaluate the roles and composition of its advisory groups or agenda committees.
• Interpretations. FASB should be the single US standards-setter for all authoritative accounting standards and interpretive implementation guidance for US GAAP. The SEC should issue only registrant-specific guidance.