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FASB Advisers: Be More Specific in Investor Outreach

Denise Lugo  Editor, Accounting and Compliance Alert

Denise Lugo  Editor, Accounting and Compliance Alert

The FASB’s main advisers on September 30, 2021, said the board should be more specific in its investor outreach, citing ways it can broaden current efforts to gin up feedback on its rulemaking efforts from tight-lipped analysts.

Outreach to investors can also be heightened beyond current efforts to ensure analysts get that call for input on topics they are best qualified to opine on, finance chiefs from some of the nation’s largest companies told the board.

The board could tap big investors such as Vanguard Group, Blackrock Inc., Fidelity, and State Street Corp., for example, to provide feedback on topics that would impact larger companies, Amie Thuener, vice president, chief accountant at Google’s parent Alphabet, said.

Think about “how do we make sure we’re going to those investors and that we are proactively getting their voice,” she said during Financial Accounting Standards Advisory Council (FASAC) discussions. “I think silence doesn’t necessarily mean agreement.”

Leveraging outreach to CFA organizations, and industry associations is another way for the board to tap into more investors, according to the discussions.

“When I see investors, oftentimes it would be at industry events, especially when they are focused on a given sector,” John Pietrowicz, senior managing director and chief financial officer of CME Group, said.

Analysts on the FASAC also pointed to the need for specificity, reaching out to trade groups, and suggested the board could use a partnership approach to incentivize those who might be reluctant to participate.

“Identifying the point person at some of the buy side and sell side firms and it may not be the CEO or CFO,” Karen Korn, head of alternative product development, Fidelity Investments, Fidelity Healthcare Group, said. “I think it feels like more like a research director or a CIO or something like that who is willing to be the partner to help get specific questions answered to hook up staff with who they need,” she said.

The discussion comes after the Alliance of Concerned Investors, a group of five senior analysts, expressed concerns to the SEC that the board was not meeting its mandate to provide investors with sufficiently useful information to make investment decisions.

In a September letter to the FASB, the group said more investors are needed on the seven-member board as the current two analysts, Gary Buesser and Fred Cannon, were outnumbered by their auditor and preparer counterparts.

Many of the suggestions made by FASAC members appear to have been already taken up by the board, according to a summary FASB Technical Director Hillary Salo gave the advisory body on the topic.

A broad amount of investor views are included in all stages of the board’s process as core to its mission is to provide them with useful information, Salo said. She pointed to the board’s recently issued investor outreach report, which reflects over 430 investor interactions over the last year through June 30.

And this year alone the board reached out to a large group of investors through a survey as part of the early stages related to its research project on intangibles, said Salo. That helped to identify 75 new investors “who expressed an interest in engaging with the FASB in the future,” she said.

Moreover, after issuing its June Invitation to Comment (ITC) No. 2021-004Agenda Consultation, for public comment, FASB staff reached out to the chief executive officers and chief investment officers at the top 15 U.S. money managers specifically to request their feedback.

“We’ve already had multiple very helpful conversations that have come out of that request,” Salo said.

 

This article originally appeared in the October 04, 2021 edition of Accounting & Compliance Alert, available on Checkpoint.

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