By Denise Lugo
Senior executives from the FASB’s main advisory council cautioned the board against issuing major new accounting changes the remainder of the year, stating accountants are burned out from coping with very extreme circumstances brought on by the COVID-19 pandemic.
Companies pushed to get their 10-Qs filed during the past three months, skipping the use of extensions, and that took incredible effort and proved burdensome, according to Financial Accounting Standards Advisory Council (FASAC) discussions on June 23, 2020.
“I think you realize that that wasn’t easy and took incredible effort,” John White, partner-corporate, Cravath, Swaine & Moore LLP, said. “But maybe what you haven’t heard, but I can say I certainly heard, after people got their 10-Qs filed – to listen to the chief accounting officers, controllers, talk to them in effect how their staff was burned out – that they had been totally focused on meeting the deadlines and they had, but they had to put off all the other projects, both business projects and personal projects,” he said.
Companies have not returned to normal, said White. “And there are really significant challenges ahead with respect to getting controls refined, getting ready for the audit, and so I guess I would ask all of you to think about making sure that we’re not adding any additional burdens on the preparer community as we move forward in the rest of the year, because they’ve done a herculean task but they’ve got a lot a head of them and I think we need to be very sensitive to them,” he said.
White’s remarks were also extended to the SEC and the PCAOB.
COVID-19, the disease caused by a novel coronavirus, created a global and national upheaval. For financial statement preparers, the virus created added burdens that put a strain on the profession that has not eased, FASAC discussions indicated.
“I think that the FASB should focus on emerging issues, on critical items in the context of standards that are already out there, or implementation,” Rudolf Bless, Chief Accounting Officer at Bank of America, said.
“There’s no need for massive new standards that are solving major problems at this point — I don’t see that,” said Bless. “So I think focus on emerging issues to deal with the critical elements of standards that are already issued that are doing implementation for some constituents, I think that would be a real good place for FASB to start.”
FASB to Resume Regular Meetings in July
The comments came after incoming FASB chair’s Richard Jones’ remarks on the board’s plans to resume normal standard-setting work in July, starting with discussions on its agenda priorities for the second half of the year.
Jones takes the FASB chairmanship helm on July 1 from Russell Golden who leaves the board June 30 due to term limits. The board in March had to pivot from its normal standard-setting routine to focus on COVID-19 matters but plans in July to get back to resuming its work, said Jones.
“When I look at our agenda right now we have 24 active projects on our agenda, we have eight research projects, and we have approximately 20 agenda requests that need to be addressed,” he said.
“We’re not ignorant of what’s going on, understand COVID distractions and delays that our stakeholders have,” said Jones. “That being said we do have a staff that has been moving forward and it’s time for us to also be moving forward, keeping in mind we need to keep our focus on emerging critical issues – looking at standards that have not yet been adopted to see what changes we could make that would be helpful to our constituents, but also factoring in this new working reality setting comment periods as well as implementation dates – key things as we’re moving forward,” he said.
The FASB recently deferred Topic 606, Revenue from Contracts with Customers, and Topic 842, Leases, for private companies and nonprofit organizations to give those companies more time to implement the changes, which are substantial. (See FASB Publishes Year Delay on Leases, Revenue Accounting Standards in the June 4, 2020, edition of Accounting & Compliance Alert.)
The board has said that in the near term it plans to issue narrow new rules on not-for-profit reporting on gifts-in-kind donations and liabilities and equity. The board also plans to issue proposals on deferring the effective date on accounting for long-term insurance, and on a chapter in the conceptual framework for elements.
For in-depth analysis of the FASB’s standard for lease accounting, please see Catalyst: US GAAP — Leases , also on Checkpoint.
Additional analysis of the lease standard can be found in the Accounting and Auditing Update Service[AAUS] No. 2016-15 and SEC Accounting and Reporting Update Service[SARU] No. 2016-13 (March 2016): Special Report: Accounting for Leases—an Explanation and Analysis of Accounting Standards Update No. 2016-02.
For in-depth analysis of the FASB’s revenue recognition standard, please see Catalyst: US GAAP — Revenue Recognition, also on Checkpoint.
Additional analysis of the revenue standard can be found on Checkpoint in the Accounting and Auditing Update Service and the SEC Accounting and Reporting Update Service [SARU No. 2014-21] (June 2014): Special Report: Comprehensive Coverage of the New U.S. GAAP Revenue Recognition Requirements.
This article originally appeared in the June 24, 2020 edition of Accounting & Compliance Alert, available on Checkpoint.
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