By Denise Lugo
New FASB Chairman Richard Jones on July 7, 2020, said his priority in the seat is to listen and learn in effort to glean insight that would aid in understating financial reporting challenges companies uniquely face at this point in time.
The “press pause” to listen to companies’ challenges from their unique vantage points will enable the board to continue to nimbly address issues “in ways that provide investors with better information in the most cost-effective way,” Jones said in insights published via LinkedIn.
Jones said most of the board’s work will likely focus on maintaining and improving existing rules rather than making dramatic accounting changes.
“I believe we already have a solid set of standards, so I anticipate most of our work will focus on maintenance and improvement rather than dramatic accounting changes,” said Jones. “That said, there should be opportunities to strike a balance between the user’s desire for more granular information with the preparer’s call for less cost and complexity. Your input helps us discover how to do that.”
The seven-member FASB under its due process has to decide on standard-setting matters by a full board vote. For a rule-change a majority of the board, at least four members, have to agree. The board chairman, however, can influence whether a topic is placed on the board’s research agenda and sets the tone of standard-setting discussions.
Jones also highlighted the importance of independent standard-setting, stating it is a great asset and privilege. “It’s an asset because it drives standards that provide unbiased information to investors and other capital suppliers,” he said. “It’s a privilege because we must continually earn the right to set standards—by listening and responding to the needs of our stakeholders.”
Jones started his role as FASB chairman on July 1, succeeding Russell Golden who vacated the post due to term limits. Jones’s first meeting helming public FASB discussions will take place July 15. The board is expected to hold agenda prioritization discussions to determine how to move forward with the 24 active agenda projects, eight research projects, and dozens of agenda requests currently on its radar.
He takes a seat on the board at a unique financial reporting period for the FASB and for the nation at large: amid major new accounting rule changes and in the midst of COVID-19 pandemic, the respiratory disease caused by a new coronavirus strain that created global and national mayhem. Restrictions nationwide that put in place business lock downs since March have been lifting, but with caveats in place.
The FASB in March pivoted from the bulk of standard-setting discussions to address emerging reporting issues companies flagged related to COVID-19. For example, the board early June deferred Topic 606, Revenue from Contracts with Customers, and Topic 842, Leases, for private companies and not-for-profit organizations to give them more time to implement the changes. (See FASB Publishes Year Delay on Leases, Revenue Accounting Standards in the June 4, 2020, edition of Accounting & Compliance Alert.)
Jones comes to board with decades of experience in the accounting profession. He had a 32-year career at Ernst & Young LLP, most recently as chief accountant, where he worked with large and small domestic and international companies in a variety of industries. He was also a member of the Financial Accounting Standards Advisory Council (FASAC), the FASB’s main advisers, from 2016 to 2018, and was a member of the AICPA’s executive committee from 2003 to 2008.
“If there’s one thing I’ve learned throughout my career, it’s the importance of being able to examine an issue from different perspectives—not solely my own,” he said. “The same holds true in standard setting.”
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 July 9, 2020 edition of Accounting & Compliance Alert, available on Checkpoint.
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