Chief financial officers and controllers can breathe a little easier now that accounting rule makers have decided to scale back their aggressive schedule and focus on completing five priority projects by next year. The announcement was made on Monday by Leslie Seidman, acting chairman of the Financial Accounting Standards Board, at a financial-reporting conference sponsored by Financial Executives International. She was reiterating decisions made by the board earlier this month.
The five projects are those related to financial instruments, revenue recognition, fair-value measurement, leases, and insurance companies. All are part of a joint effort by FASB and the International Accounting Standards Board to converge U.S. generally accepted accounting principles and international financial reporting standards into a single set of global rules.
Seidman told her audience that work on several other joint projects — including those pertaining to consolidation, derecognition, financial-statement presentation, emissions trading, financial instruments with characteristics of equity, and the so-called conceptual framework — has been postponed but not abandoned. Three FASB-only projects have also been put on hold: disclosures of certain loss contingencies, disclosures on multiemployer pensions, and accounting treatment of investment properties.
Redeliberation by FASB and the IASB, as well as negative feedback from financial-statement preparers and users, convinced board members that the self-imposed 2011 deadline did not give them enough time to vet and issue their long list of rule rewrites. Further, Seidman said the boards were particularly concerned with making sure the rules were functional from a practical standpoint.
The boards also expect to issue effective dates for rules and transition guidance separately, rather than releasing that information with the related exposure drafts.
Seidman and other conference speakers speculated that the rule closest to completion is the revenue-recognition standard. Indeed, FASB and the IASB found enough common ground to issue nearly identical exposure drafts. However, they are currently reviewing the more than 1,000 comment letters on the project that have been submitted. Lynne Triplett, a Grant Thornton partner who participated in a panel about the proposed revenue-recognition rules, noted that although the accounting boards still have to settle some fundamental operational problems, they appear to be making swift progress.
Meanwhile, Seidman said FASB is moving forward with its rulemaking agenda despite having two vacant board seats. (Last August FASB’s trustees expanded board membership from five to seven, and they have yet to fill the new seats.) Nevertheless, Seidman assured the audience of financial executives that rulemaking efforts would not be slowed by the search for new FASB members. Changes in board makeup are “built into the DNA of the organization,” she said, noting that members serve staggered terms with the expectation that “new blood” will be brought in on a regular basis.
Seidman said that FASB’s trustees have narrowed the field of candidates and will likely make their choice by the beginning of next year, if not sooner. The search committee has been looking for candidates who will complement the current board’s experience, she said, and are therefore interested in persons with private-company, investor, or international experience.