Last week, officials from the FASB and SEC spoke at the 32^nd Annual SEC and Financial Reporting Institute Conference at the University of Southern California in Pasadena. Russell Golden, soon-to-be FASB chairman, Elisse Walter, SEC commissioner, and Paul Beswick, SEC chief accountant, spoke about various topics, including the importance of international standard setting, convergence projects, PCAOB matters, and the new framework released by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Mr. Golden outlined the FASB’s current and future agenda. He emphasized that the FASB’s completion of its work on current convergence projects is “critically important” and that therefore the Board’s top priority is to complete and issue (1) the revenue recognition standard in the coming months, (2) two financial instruments standards (on classification and measurement and on impairment) in early 2014, and (3) the leasing and insurance standards in 2014. Mr. Golden also noted that the FASB intends to create separate "transition resource groups" to facilitate the implementation of each standard. The groups will consist of FASB representatives, preparers, auditors, and investors and will focus on education, interpretation, and potential postimplementation amendments.

Regarding the FASB’s future objectives, Mr. Golden noted that the Financial Accounting Standards Advisory Council has published a survey to obtain information from stakeholders on how the FASB should prioritize its project agenda. Possible projects include (1) disclosure framework, (2) hedging, (3) pension accounting, and (4) liabilities and equity. Further, he stated that the FASB will continue to work with the Private Company Council to address the needs of users of private-company financial statements. In addition, Mr. Golden discussed the new Accounting Standards Advisory Forum and how the FASB’s membership in it will help advance the convergence process.

In her prepared remarks, Ms. Walter indicated her support of high-quality financial reporting that gives investors decision-useful information. She recognized the critical importance of developing accounting standards that support such high-quality financial reporting, particularly those that reflect the economics of increasingly complex business transactions. She added that global convergence is another key way to achieve high-quality financial reporting, and she continues to support the efforts of both the FASB and IASB on their convergence projects. Ms. Walter stated that the SEC has taken a “number of steps . . . including soliciting views” from U.S. public companies about the incorporation of IFRSs into the U.S. financial reporting system. She also stated that the success of implementing IFRSs in the United States would depend on (1) appropriate training for all constituents at all levels, (2) sufficiency of resources dedicated to updating financial reporting systems, (3) identification of interpretative issues, and (4) a focus on investor understanding. Ms. Walter also encouraged continued outreach to investors as standards are developed.

In addition, Ms. Walter emphasized the importance of auditors, transparency of registrants’ disclosures, and PCAOB inspections of public companies and broker-dealers to the U.S. capital markets.

Mr. Beswick stated that the United States needs a strong and independent IASB. He provided statistics on foreign registrants that file their financial statements under IFRSs and pointed out that the United States is heavily invested in those registrants. He noted that approximately 450 registrants that file with the SEC report under IFRSs and that the market capitalization of such filers is in the trillions of U.S. dollars. Consequently, the SEC has undertaken measures to protect those who invest in companies that report under IFRSs. These measures include (1) ensuring the consistent application of IFRSs, (2) working to improve the quality of IFRSs, and (3) representing the United States on the IFRS Monitoring Board.

Mr. Beswick also discussed how a successful implementation of convergence projects might look. He stated that “a successful implementation is when the standards are applied consistently among registrants and their auditors to the benefit of investors. [In addition, to] the extent there are judgments applied, the standards should result in those judgments being clearly disclosed to investors so they can factor that into their analysis.” He suggested that to support companies’ success, the FASB and the IASB should establish long implementation periods.

Mr. Beswick also highlighted the PCAOB’s accomplishments, with a focus on its continuing efforts to build cross-border relationships that are key to conducting global inspections of U.S. public companies. Finally, he noted that COSO recently issued an updated internal control framework that will supersede its 1992 framework. The updated framework contains 17 principles “to help management focus on important aspects of the components of internal control.” During the transition period between May 14, 2013, and December 14, 2014, companies can continue to use the 1992 framework. However, COSO has encouraged companies to make the transition to the updated framework as soon as possible. Mr. Beswick also stated that the SEC staff plans to monitor companies’ transition to the updated framework.