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FASB and IASB chairs discuss priorities and progress

  • Speech — dark blue Image

Dec 10, 2013

At the 2013 AICPA Conference on Current SEC and PCAOB Developments, FASB Chairman Russell Golden discussed the FASB's potential post-convergence project agenda, while IASB Chairman Hans Hoogervorst measured the IASB's achievements against the SEC Staff Report published in July 2012.

Mr. Golden spoke at length about the future of the FASB as it wraps up the final convergence projects with the IASB. Mr. Golden noted that, in its future agenda, the FASB needs to create the right balance between major, long-term projects and projects that address specific issues of concern to stakeholders.

Next, Mr. Golden opined that in the coming months, the FASB should evaluate an agenda that includes projects that fall into four categories. These categories, he said, have no hard and fast boundaries and will often overlap:

  •  Foundational projects — Projects that have an overarching, long-standing impact on how those who use U.S. GAAP practice accounting.
    • Conceptual framework: Mr. Golden suggested reviving the conceptual framework project, citing the recent renewed interest by the IASB. The collaboration would help the FASB "continue the process of converging U.S. GAAP with IFRS and also would address important needs for our stakeholders — and the Board."
    • Disclosure framework: Mr. Golden recommended focusing on disclosure effectiveness, with the goal of improving disclosure content while also reducing the amount of disclosure content. He mentioned the FASB's consultation with the IASB and European Financial Regulatory Advisory Group (EFRAG).
  • Recognition, measurement, and presentation projects — Projects that will lead to greater transparency in financial reporting. Mr. Golden suggested that the FASB examine a potential project on accounting for pensions. He noted the IASB's recent work with IAS 19, Employee Benefits, saying "We certainly plan to consider what the IASB is doing as we begin to think through our next steps. We also plan to consider changes in types of employee pension plans, including cash balance pension plans." 
  • Reducing complexity — Projects that will help reduce complexity and increase the simplification of financial reporting.
  • Transition and implementation — For each significant project that the FASB undertakes, Mr. Golden noted that the Board should spend "a considerable amount of time and energy addressing implementation and education issues." A transition resource group is planned, the goal of which is to better understand implementation issues before the implementation process begins. Mr. Golden envisions that the group would focus on three primary areas: education, interpretation, and amendments.

Mr. Hoogervorst spoke next, reflecting on the IASB's progress in 2013; he compared IASB benchmarks to the SEC's 2012 Staff Report on IFRS as a measure of success. He discussed the SEC staff's conclusion that the IASB needed to deepen its cooperation with national standard setters. Mr. Hoogervorst pointed at the formation of the Accounting Standards Advisory Forum (ASAF) in February 2013 (of which the FASB is a member).

Next, Mr. Hoogervorst turned to what he called "some scary estimates about the cost of transition to IFRS for US issuers" that were included in the SEC report. He cited the results of a survey on the costs of IFRS Transition in Canada, published in July 2013. That survey showed that the costs of adopting IFRSs in Canada were planned for and expected — with most costs turning out to be the same or less than budgeted; the costs were significant but manageable.

As the SEC report also touched on a lack of clarity on the extent to which jurisdictions had actually adopted IFRSs, Mr. Hoogervorst pointed at the jurisdiction profiles the IFRS Foundation is compiling — with the last 41 profiles published just yesterday. The profiles offer detailed information about the use of IFRSs in individual jurisdictions and have also revealed that more than 100 of the 122 countries surveyed have already adopted IFRSs for most or all domestic listed companies.

As the final achievement that corresponds to a conclusion of the SEC report, Mr. Hoogervorst mentioned the joint Statement of Cooperation of the International Organization of Securities Commissions (IOSCO) and the IFRS Foundation. The goal of this cooperation is to ensure that international standards are applied and enforced on a globally consistent basis.

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