FASB Setting the Standard

Transcription

1 National Society of Accountants for Cooperatives FASB Setting the Standard Daryl E. Buck, FASB Member August 4, 2014 The views expressed in this presentation are those of the presenter. Official positions of the FASB are reached only after extensive due process and deliberations. Agenda Overview of FAF & FASB Standard Setting & Due Process Q & A 2 Financial Accounting Standards Board Overview of FAF & FASB 3 1

2 Accounting Standards & Capital Markets Global markets depend on constant flow of reliable, comparable financial data Investors and taxpayers demand relevant, reliable, clear, consistent and comparable data to make informed decisions High-quality accounting standards and financial reporting play a role 4 History of Standard Setting SEC and AICPA create Wheat Committee Securities Exchange Act of 1934 establishes the SEC Wheat Committee recommends creation of Financial Accounting Foundation (FAF) National Committee on Municipal Accounting established 1938 National Committee on Governmental Accounting established 1959 FAF recognized as standardsetting authority Committee on Accounting Procedure (CAP) American Institute of Accountants Accounting Principles Board (APB) American Institute of Certified Public Accountants 5 History of Standard Setting FAF establishes Financial Accounting Standards Board (FASB) National Council on Governmental Accounting (NCGA) established FAF re-evaluates FASB/GASB jurisdiction FAF establishes Governmental Accounting Standards Board (GASB) FASB & IASB sign Norwalk Agreement Congress passes Sarbanes Oxley, establishing FASB as the sole standard setter in the US 6 2

3 FAF FASB GASB Relationship Standard d Setting FAF Oversight FASB GASB FAF Support Standard d Setting 7 FAF Corporate Structure Delaware Corporation Incorporated 1972 FAF Not-for-profit 501(c)(3) Files IRS Form FAF Mission Establish and improve financial accounting and reporting standards, fostering financial reporting that provides decision-useful information to investors and other users of financial reports 9 3

4 FAF Mission Accomplished through a comprehensive and independent standard-setting process that: Encourages broad participation Objectively considers all stakeholder views Is subject to appropriate oversight and accountability 10 FAF Board of Trustees Trustees (currently 17) Business, professional, and govt. experience - 3 government officials - Remainder are at-large - Single 5-year term - Varied backgrounds - users, preparers, government preparers, auditors, academics - Large market and middle-market experience 11 FAF Board of Trustees Responsibilities Regardless of background, Trustees must demonstrate: Commitment to mission of FAF, FASB, & GASB Knowledge of, and sensitivity to, investor interests They do not represent particular constituencies 12 4

5 FAF Financial Highlights 2013 $49.2 million in net op revenue and investment and other income FASB accounting support fees $25.5 m (pursuant to Sarbanes Oxley) $13.4 m $7.4 m FAF publication and subscription net sales GASB accounting support fees (pursuant to Dodd Frank) $2.9 m Investment and Other income 13 Standard Setting Boards Sets standards for public and private companies and not-for-profits Established in 1973 Sets standards for state and local governments Established in FASB Mission To establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports Accomplished through comprehensive and independent process that encourages broad participation, objectively considers all stakeholder views, and subject to oversight by FAF Board of Trustees 15 5

6 FASB Members Russ Golden 2017* Jim Kroeker 2018** Daryl Buck 2015** Tom Linsmeier 2016 Hal Schroeder 2015** Marc Siegel 2018 Larry Smith 2017 * eligible for reappointment to an additional three-year term ** eligible for reappointment to a second five-year-term 16 GASB Mission To establish and improve standards of state and local government accounting and financial reporting that will: Result in useful information for users of financial reports Guide & educate the public, including issuers, auditors, & users of those financial statements Accomplished through comprehensive and independent process that encourages broad participation, objectively considers all stakeholder views, and subject to oversight by FAF Board of Trustees 17 FASB GASB Organization FASB & GASB similarly organized, but Key differences: FASB Full-time Board 92 staff SEC oversight GASB Part-time Board, full-time Chair 22 staff 18 6

7 FASB Organization FASB Chairman & Board Director Planning & Support Technical Director Standards Projects 92-member Staff Assistant Technical Directors Senior Investor Liaisons Project Managers & Staff Practice Fellows Postgraduate Technical Assistants XBRL Specialists & Staff Support Staff 19 Advisory Council Financial Accounting Standards Advisory Council Consults on: Major technical issues Technical agenda & project priority Strategic matters (for example, private company issues) 20 Private Company Council Established by FAF on May 30, 2012; overseen by FAF Independent chair, sets own agenda Identifies, deliberates & votes on proposed modifications to existing U.S. GAAP for private companies Based on agreed-on criteria w/fasb (PCDMF) Subject to FASB endorsement and public due process Primary private company advisory body to FASB on active FASB projects 21 7

8 Emerging Issues Task Force Mission: assist FASB through the timely identification, discussion, and resolution of financial accounting issues within the framework of existing authoritative literature Chaired by FASB Technical Director Observers (FinRec, SEC, PCC) Agenda established by FASB Chair 22 Other FASB Advisory Groups IAC Investors Advisory Committee NAC Not-for-Profit Advisory Committee SBAC Small Business Advisory Committee All are invited to observe their public meetings 23 FASB SEC Relationship Quarterly Meetings FASB Chair, Board member, Director, staff as appropriate, OCA, Corp Fin, Enforcement, PCAOB staff SEC Observer Advisory group meetings (FASAC, SBAC), EITF meetings, public roundtables Communications Staff-to-staff/Chair-to-Chair, as-needed Formal Monitoring of FASB projects SEC staff monitor Board projects; project resource group; external reviews; SEC staff observe most Board meetings 24 8

9 XBRL & the U.S. GAAP Taxonomy extensible Business Reporting Language: Tech language that allows preparers to code (tag) each element of a financial report with additional info about that element. U.S. GAAP Taxonomy: Grouping of elements that make up U.S. GAAP. Includes elements for all required disclosures as well as common reporting practices 2010: SEC moved Taxonomy development & maintenance to the FAF & FASB. - Greater integration with the FASB s standard-setting, Codification, & related processes. 25 Financial Accounting Standards Board Standard Setting & Due Process 26 FASB: Standards FASB Accounting Standards Codification TM Authoritative U.S. GAAP Accounting Standards Update Non-authoritative How & why Codification amended 27 9

10 FASB GASB: Standard Setting Process Outreach FASB: host public roundtables Add project to Identify a financial agenda and GASB: host public reporting issue deliberate hearings/forums FASB: issue Accounting Standards Update GASB: issue pronouncement Pre-agenda Research GASB: scope consultation Issue a document for public comment Preliminary Views Invitation to Comment Exposure Document Analyze comment letters, discussions, etc., and redeliberate Post Implementation Activities 28 Due Process Overview Post Agenda Make agenda decision Re-deliberate based on comments Issue final standard Deliberate staff analysis Host public hearings and roundtables Post implementation review Expose for public comment Exposure draft Discussion document 29 FASB Stakeholders Investors/Users Other standard setters Preparers Regulators Auditors Academics 30 10

11 Questions? 31 11