The FASB plans to issue a report by early July that will summarize how input the board received on its agenda consultation document affected its standard-setting process.
For the balance of this month the FASB will discuss the remainder of issues toward establishing its five-year agenda, after which will conclude that specific outreach process, Chair Richard Jones said on June 9, 2022.
“What does that mean?” said Jones. “That means that while we’ve brought that process to a close we’re reverting back to our normal ‘solicitation of ideas to work on’ in the agenda versus this specific initiative,” he told the Financial Accounting Standards Advisory Council (FASAC), the board’s main advisory body.
In June 2021, the board issued Invitation-to-Comment (ITC) No. 2021-004, Agenda Consultation, to solicit public comment on what should be its priorities from 2022 to 2026. The ITC generated 521 comment letter responses, including from the acting SEC chief accountant.
Jones said the responses caused the board to reframe projects on income statement expense disaggregation and income tax disclosures and add projects on accounting for digital assets, and accounting for environmental credits to its technical agenda.
The responses also caused the board to drop two projects from its technical agenda related to reorganizing Topic 810, Consolidation, and on distinguishing liabilities from equity. The latter topic was flagged last year as a troublesome area for companies that use special purpose acquisition company (SPAC) vehicles to go public, cited as the cause of frequent misstatements due to accounting for warrants.
20 Topics on Technical Agenda
Currently, the board has 20 projects on its technical agenda and will soon issue a final standard related to equity securities subject to contractual sale restrictions, said Jones.
The board’s near term work includes continuing redeliberations on Proposed Accounting Standards Update (ASU) No. 2022-001, Reference Rate Reform (Topic 848) and Derivatives and Hedging (Topic 815): Deferral of the Sunset Date of Topic 848 and Amendments to the Definition of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate, on Proposed ASU No. 2021-007 , Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, and Proposed ASU No. 2021-001, Interim Reporting (Topic 270): Disclosure Framework—Changes to Interim Disclosure Requirements.
Eight Topics on Research Agenda
Jones, under his purview as chair, also revised the board’s technical agenda, a separate process from setting the technical agenda. “The research agenda is used really for myself and my staff to get additional information to bring items to our board to make future technical decisions,” he explained.
Currently there are eight projects on the research agenda: accounting for and disclosure of intangibles; accounting for exchange-traded commodities; accounting for financial instruments with environmental, social, and governance (ESG)-linked features; accounting for government grants; agenda consultation; consolidation for business entities; financial key performance indicators for business entities; and hedge accounting—phase 2.
This week the board plans to issue an ITC on government grants to solicit feedback on whether to incorporate international accounting standard (IAS) 20, Accounting for Government Grants and Disclosure, into U.S. GAAP for recognition and measurement rules.
Responses to the government grants ITC will determine whether a project is added to the technical agenda or whether the topic gets quashed.
Other major ongoing initiatives by the board are post-implementation reviews (PIRs) of broader standards on revenue recognition, leases, and credit losses.
This article originally appeared in the June 13, 2022 edition of Accounting & Compliance Alert, available on Checkpoint.
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