- The Financial Accounting Standards Board is gearing up to take a fresh look at the accounting topics it should prioritize for updates and new guidance in 2024, three years after it launched the first investor-focused outreach process spearheaded by Chair Richard Jones to help it do just that, the U.S. accounting standard setter stated in a report released Thursday.
The plan to potentially restock the board’s agenda comes as initiatives that are poised to yield a wide range of new or updated accounting standards on a number of hot-button issues that impact everything from how companies should report their cryptocurrency holdings to tax disclosures — which grew out of the previous outreach process — are now in the home stretch of being finalized.
“The FASB has made substantial progress on key issues identified during the 2021 agenda consultation project, so the time will be right for another one,” a FASB spokesperson wrote Friday in an emailed response to questions from CFO Dive.
Jones has made a big push to include investors in the standard setting process — a group that in the past the board had been criticized for ignoring — since becoming chair in 2020. Kicking the process off during the pandemic, Jones told CFO Dive last year that he was “pleasantly surprised” with how interested all stakeholders were in improving financial reporting.
In its 2023 Investor Outreach Report, the third annual report on the subject, the board stated that it has continued to make progress, gaining perspective through 435 investor interactions in the year ended June 30, although that’s down slightly from 485 investor interactions reported in the previous fiscal year.
The latest report states that FASB must proactively seek feedback from investors because they are not generally focused on the regulator’s accounting standard-setting activities.
For example, the accounting regulator only received 5% of the feedback from formal comment letters, 29% through the Investor Advisory Committee set up in 2007, and 66% through interviews and other outreach such as through the board’s staff.
But the report stated that it has made progress on some of the initiatives that investors have asked for in order to make financial reports more transparent and useful. These areas include new disclosures related to the use of supplier finance programs that appeared in many filings companies made in the first quarter with the Securities and Exchange Commission, and proposed standards now in the works that will require more detailed disclosures of a company’s tax standards and provide new accounting standards that would guide companies to use the fair value accounting for crypto holdings.
A draft report from the SEC last year criticized the FASB, now in its 50th year, with falling short with providing the new or updated guidance needed by investors to analyze companies in today’s fast-changing markets, CFO Dive previously reported.
The report stated that there “is a significant backlog of high-priority accounting topics that need to be addressed (e.g. intangibles and key performance indicators). The nature of public companies has changed dramatically over recent decades, and the FASB has yet to promulgate standards to account for these changes,” the Sept. 14 draft posted on the SEC website states.”