In terms of overall priorities for the FASB going forward, Mr Golden focused on the following areas:
- Improve the efficiency and effectiveness of the FASB's operations to "shorten the life cycle of.. projects while enhancing their quality", through actions such as evaluating the agenda decision process and responding to constituent concerns about the FASB Codification
- Reduce complexity and cost of accounting standards while maintaining or improving the relevance of information provided by both private and public companies - including through working with the Private Company Council
- Improve the way the FASB communicates to improve awareness and understanding of its projects, including a focus on "plain English" and devoting time to addressing implementation and education issues (such as with the forthcoming standard on revenue recognition)
- Increase collaboration with the Financial Accounting Foundation (FAF) and Governmental Accounting Standards Board (GASB) to better serve the needs of all constituents.
Mr Golden discussed the concept of 'independence' in terms of what it may mean in terms of the FASB, and its critical importance to the establishment of high-quality accounting standards. Mr Golden believes that 'independence' is "a privilege to be earned" by being accountable - through such actions as following process, considering a wide range of views, careful consideration of FAF post-implementation reviews but overall "rappelling down the high walls of that Ivory Tower... and spending a significant amount of time with the people who are directly and indirectly affected by the standards that [the FASB] set".
In turning to the topic of convergence of U.S. GAAP with International Financial Reporting Standards (IFRS), Mr Golden began his analysis as seeing the process since the 2002 Norwalk Agreement as a "major achievement", before noting that the methods used to achieve the goal of converged global accounting standards "will change":
With the impending end of the era of bilateral convergence, we are about to enter a new environment in which we are faced with a critical decision. We must decide whether, and if so, how, to continue to pursue the goal of convergence – while ensuring that we address the pressing concerns of those who invest in U.S. capital markets.
Mr Golden considers the completion of the major IASB-FASB convergence projects as a top priority for the remainder of 2013 and 2014, outlining his expectations that a standard on revenue recognition will be issued by the end of 2013, final standards on leasing, the classification and measurement of financial instruments and financial instrument impairment issued in 2014, and that the FASB "will finalize decisions on insurance thereafter". This timetable is longer than called for by the G20 in its recent Leaders' Declaration.
Consistent with earlier observations from both the IASB and FASB, Mr Golden acknowledged that the previous bilateral model of convergence "needs to evolve" to respond to other jurisdictions and their standard setters, especially those representing major capital markets:
I envision a long-term, global standard-setting environment in which the FASB, the IASB, and other major capital market standard setters co-exist and cooperate with the stated goal of issuing converged standards, while also addressing the specific needs of the capital markets for which they set standards.
Linking these sentiments to the FASB's own goals, Mr Golden noted the "FASB's first priority is to improve financial reporting for the benefit of investors and other users of financial information in U.S. capital markets" and noted other barriers to reducing global differences in financial reporting, such as "significant differences... in the auditing and enforcement of financial reporting in jurisdictions around the world", meaning that "complete convergence of financial reporting cannot be accomplished through financial accounting standards alone".
Notwithstanding these comments, Mr Golden outlines a number of ways in which the FASB can "improve financial reporting for U.S. capital markets while also seeking to improve and converge financial reporting internationally", including:
- Through the development of U.S. GAAP, by starting with an evaluation and consideration of IFRS when implementing improvements to U.S. GAAP, and where U.S. GAAP can influence the shape and future direction of international standards
- By actively participating in the development of IFRS, through actively participating in the IASB's projects through the Accounting Standards Advisory Forum (ASAF) and other means, such the sharing of views from the FASB's due process and outreach activities
- By enhancing relationships and communications with other national standard setters "to promote a broader flow of information and ideas that mutually inform each other's thinking and contribute to an environment that will foster greater convergence" even though in some cases "the interests of investors in their own capital markets may outweigh the goal of creating completely converged accounting standards".
Mr Golden concluded his speech with an analysis of likely FASB project priorities resulting from a recent survey by the Financial Accounting Standards Advisory Council (FASAC). The results of the survey are expected to be made publicly available soon and help the FASB to address whether to proceed with projects on the backburner (a number of which were originally commenced or considered for joint IASB-FASB projects), issues which have been the focus of news stories and comment, potential convergence issues, and issues arising from the FAF's post-implementation review process.
Click for the full text of the speech (link to FASB website).