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FASB Board member discusses the future of accounting for rate-regulated utilities

  • Speech — dark blue Image

Jun 25, 2014

FASB Board member Thomas J. Linsmeier spoke at yesterday’s Accounting Leadership and Chief Audit Executive Conference, presented by the Edison Electric Institute and the American Gas Association in San Francisco. Focusing on rate-regulated entities, he discussed the FASB's efforts to simplify and improve U.S. GAAP.

Mr. Linsmeier explained that the FASB envisions “a new, long-term, decentralized, global standard-setting environment in which the FASB, the IASB, and other major capital market standard setters co-exist and cooperate, as peers, with the goal of issuing more comparable standards, while also addressing the specific needs of the capital markets for which they set standards.”

He noted that the FASB would carry out its mission in this new environment "1) Through the continued development and improvement of GAAP; 2) By actively participating in the development of IFRS; and 3) By enhancing relationships and communications with other national standard setters."

However, he noted that despite the urging by some in the international community to develop a new, converged standard with the IASB, he does not “foresee the FASB making major changes to [its] model.” Mr. Linsmeier stated that while the FASB rate-regulation model is not perfect, “it is not broken” and that it is “very hard to conclude that it would be cost-beneficial to ask our stakeholders to completely overhaul their accounting for rate-regulated activities just to achieve convergence with IFRS.”

The full transcript of his speech is available on the FASB’s Web site.

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