From the Chairman's Desk
By Russell G. Golden, FASB Chairman

Big Ticket Standard Setting


Yogi Berra once said that “baseball is 90 percent mental—and the other half is physical.” Although Yogi would not make much of an accountant, there’s some truth to his sentiment when it comes to the FASB. Sometimes it seems as if 90 percent of successful standard setting is identifying the right problems to address—and the other 90 percent is developing carefully considered and fully vetted solutions to those problems.

A first step in identifying the “right” issues is asking our stakeholders what they think. We must determine which issues are the most critical and whether they can, in fact, be addressed through standard-setting.

The FASB is determining whether there are additional “big ticket” issues we should tackle—and if so, when we should address them.
This is how our current projects on leases, credit losses, classification and measurement, hedging, and insurance made it onto our agenda. Now that some of our major projects are winding down—and good progress is being made on our narrow-focus simplification projects—the FASB is determining whether there are additional “big ticket” issues we should tackle—and if so, when we should address them.

By “big ticket” issues, I mean ones that are comprehensive—issues that impact multiple industries and that affect both public and private companies and not-for-profit organizations. Revenue recognition, leases, and financial instruments are examples of issues that would fall into this category.

Our agenda review coincides with a similar review underway at the IASB. This timing creates additional opportunities to promote greater collaboration with our international counterparts on major issues of mutual importance to our respective stakeholders.

We plan to issue a Discussion Paper seeking your input on our initial ideas about what those issues might be, and why we should—or shouldn’t—add them to our agenda.
We hope that you will add your voice to the discussion to help us identify future big ticket issues. We plan to issue a Discussion Paper seeking your input on our initial ideas about what those issues might be, and why we should—or shouldn’t—add them to our agenda.

A Discussion Paper is an opportunity for stakeholders to provide input at an early stage of our agenda decision process. Unlike an Exposure Draft—a later-stage document that reflects significant outreach, research, and analysis on a specific topic—a Discussion Paper is a springboard for dialogue and debate. The feedback received on a Discussion Paper helps the Board develop our thinking and structure an action plan.

The process of creating that Discussion Paper begins next month, when the Financial Accounting Standards Advisory Committee (FASAC) initiates its periodic survey on FASB agenda priorities. You may recall that the FASAC did a similar survey in 2013, in which respondents identified our current areas of focus, including the Simplification Initiative, and the Disclosure Framework, Hedging, and Conceptual Framework projects.

This year, we also are surveying members of the FASB advisory community, which represents a cross-section of our stakeholders.
This year, we also are surveying members of the FASB advisory community, which represents a cross-section of our stakeholders. FASAC itself is a mix of practitioners representing a broad spectrum of the accounting community—Big Four, large national and regional accounting firms; public, private and not-for-profit preparers; buy- and sell-side investors in the areas of equity, rating and lending; as well as representatives of the academic, audit committee/investor relations, and legal communities.

The FASAC also will survey members of the FASB’s Investor Advisory Committee (IAC), the Not-for-Profit Advisory Committee (NAC), the Small Business Advisory Committee (SBAC), the Emerging Issues Task Force (EITF), and the Private Company Council (PCC).

Survey respondents will be asked to weigh in on the FASB’s future agenda priorities. It also will seek “blank sheet” improvement ideas, specifically:
  • What are the most needed financial reporting improvements and why?
  • What is the problem and what are feasible alternatives?
  • When is the solution needed, and for whom?
The results of that survey will be compiled and analyzed by the FASB staff for discussion at the public portion of the September 29th FASAC meeting. A final compilation of survey results is expected to be published in the fourth quarter.

The survey results and subsequent analysis will be summarized in the FASB Discussion Paper. It will describe the top areas of concern, further articulate the identified problems, and present possible solutions.

This is where your input is critical.

The Discussion Paper will be your opportunity to tell us whether you agree or disagree on areas of improvement identified—and why. We’ll also want your input on other potential issues, possible standard-setting solutions, and prioritization. In other words—what do you consider the big-ticket items?

Developing the right solutions means identifying the right problems.
I believe that identifying the issues we should be working on—and which can be addressed through standard setting—brings us more than halfway toward a successful conclusion. Developing the right solutions means identifying the right problems. And as with all aspects of our due process, that means listening—carefully—to your experiences, input, and concerns.

Furthermore, your feedback will reveal what priority issues dovetail with those of our international counterparts—and whether there’s an opportunity to work toward converged solutions to those issues.

As always, your input during this process will help ensure the Board’s resources are well spent. I thank you in advance for continuing to share your views so that we can make GAAP the best it can be.