- The Financial Accounting Standards Board (FASB)’s multi-year effort to draw more stakeholder input to help set its priorities drew 522 responses and a three-fold jump in investor feedback, ultimately reshaping its agenda and leading the board to add accounting standards for crypto, environmental and carbon offset credits as well as software costs to its list of standard setting priorities, according to a report released Wednesday. The lion’s share, or 445 of the responses received, addressed digital assets.
- The initiative led the board to expand its research agenda to include accounting standards related to exchange-traded commodities, financial Instruments with environmental, social, and governance (ESG)-linked features, hedging and possible changes to the definition of a derivative, government grants, consolidation for business entities, key performance indicators (KPIs) for business entities and statement of cash flows.
- “While the feedback from all of our stakeholder groups was tremendous, the increased participation of investors in our process has already shaped our agenda. The top seven most frequently cited investor priorities either are now included on our technical agenda or are undergoing further analysis as part of our research agenda,” FASB Chair Richard Jones and Technical Director Hillary Salo wrote in the 2021 FASB Agenda Consultation Report.
The U.S. accounting standard-setter has been on a roll lately, adding such hot-button issues as cryptocurrency and digital assets, environmental credits and carbon offsets and software costs to its top agenda while dropping a four-year project to change goodwill accounting.
Those changes follow an agenda consultation initiative spearheaded in 2020 by the then newly-arrived FASB chair Richard Jones to assist in deciding where the board should focus its efforts. A 28-year veteran of Ernst & Young, Jones is the eighth chair of the seven-member board that sets generally accepted accounting principles (GAAP), according to his LinkedIn account.
In 2021 FASB’s outreach efforts identified more than 40 topics that the board should consider for potential improvements in standard setting, according to Wednesday’s report. The board subsequently issued an invitation for stakeholders to comment in June of 2021 that generated a 300% jump in investor responses as compared to those received in a 2016 agenda consultation, according to the report.
FASB’s technical agenda, which tees up issues for new standards, now includes 13 standard setting–recognition and measurement projects, six standard setting–presentation and disclosure projects, two framework projects, three post-implementation review projects and eight research projects, according to the report.
The number of topics on FASB’s agenda at any given time depends on many factors, such as the breadth and complexity of the topics, resources available, and urgency of the topics, according to Christine Klimek, a FASB spokesperson. “Over the past year and a half, the FASB has worked to build an agenda that reflects the current priorities of our stakeholders as part of our agenda consultation project,” Klimek wrote in an email.