FASB to Prioritize Disclosure Framework, Financial Instruments Aim for Simplification of Codification
The Financial Accounting Standards Advisory Council (FASAC), the main advisory group for the Financial Accounting Standards Board (FASB), recently released the results of a survey it performed to solicit views about FASB’s future agenda. The purpose of the FASAC’s role is to advise the FASB on future project priorities and other possible new agenda items.
The FASAC’s annual survey of constituents’ views helps the FASB develop its agenda of what its upcoming priorities for the next three to five years and its most urgent priorities for the next two years should be. A high-level summary of the results of the survey revealed a strong desire by many constituents for the following to be addressed: financial disclosures, hedging and simplification of FASB’s codification of U.S. GAAP.
The top projects survey participants thought the FASB’s agenda should address were the disclosure framework, accounting for financial instruments – hedging, financial instruments with the characteristics of equity and pension accounting. With the completion of several major FASB projects on the current agenda expected in the next year or so, the survey was timely in providing the FASB’s constituents an opportunity to share their views on projects and areas that they believe are the most important for FASB to address.
Other priorities mentioned in the survey included overhauling the conceptual framework that the FASB uses as a foundation for developing new standards, financial statement presentation, liquidity and interest rate disclosures and accounting for intangible assets. While many of the constituents polled had similar priorities, some who answered the survey gave greater priority to accounting for intangible assets, such as intellectual property, than other groups.
While some of these projects, most notably disclosure framework, accounting for financial instruments and pension accounting, may affect nonprofit organizations, there are a few that might not. It is also key to note that the FASB’s current agenda for this year will include the continuing contributions of the Private Company Council (PCC) (three projects that could affect nonprofits) and the Not-for-Profit Advisory Committee (NAC) (one standard-setting and two research projects). These groups are providing advice that could help simplify both private and public company and nonprofit accounting and financial reporting, which has already resulted from some PCC recommendations finding their way into proposed Accounting Standards Updates (ASU) applying to both public and private companies.
The next edition of our Nonprofit Standard Newsletter will offer more insight into what these changes might mean for nonprofit organizations. Stay tuned to our blog to be notified when it’s available.