March 29, 2019
The Financial Accounting Standards Advisory Council (FASAC) held its regular quarterly meeting on Friday, March 29, 2019. The following topics were discussed:
The Role of the Conceptual Framework: FASB staff provided an introduction about the development of the conceptual framework. Following that introduction, FASAC members discussed the FASB’s and the accounting and investment communities’ use of, and education about, the conceptual framework. Council members shared information about how and when they use the framework, as well as suggestions for further education about its existence.
Overall, FASAC members acknowledged that the framework is most useful as a foundation for the Board in standard setting and as a communication tool. Many Council members recommended that the Board provide transparency and analysis when the Board’s conclusions deviate from the conceptual framework in the basis for conclusions of accounting standards.
Accounting for Highly Inflationary Economies: FASAC members provided feedback about potential improvements to the current requirements for accounting for highly inflationary economies and the urgency of those potential improvements. Council members discussed:
- The costs involved with the current accounting (particularly when a company is required to change its functional currency within a short time span)
- The integrity of the inflation data
- The desire and need for consistency in companies’ determinations about when an economy becomes highly inflationary, and
- Whether the accounting requirements could be substituted with disclosures about risks relating to highly inflationary economies.
Implementation of Major Standards: FASAC members discussed the timeliness, retrievability, and sufficiency of FASB implementation guidance and the FASB’s current processes for providing implementation-related information.
FASAC members indicated that implementation and educational materials are useful to help preparers and practitioners apply the standards, for investors and other users to gain a better understanding about the expected changes to the financial statements and industry-specific impacts, and for academics in educating students.
Several Council members discussed the usefulness and prevalence of implementation guidance from accounting firms and the relationship between successful implementation and collaboration with IT system providers and regulators.
Overall, Council members commended the Board on the sufficiency and usefulness of the FASB’s implementation guidance efforts, including the effectiveness of Transition Resource Groups (TRG). Some Council members suggested that the Board expand the use of TRGs to all major standards going forward.
For more information on FASAC, visit the FASB website.