State Board Report
The Financial Accounting Standards Board has significantly increased its outreach to private companies, and taken steps to “make private company concerns an integral part of every standard-setting deliberation” it undertakes, FASB Chair Leslie F. Seidman told the NASBA Meeting. Steps taken include: initiation of a webcast education series that offers CPE credit; use of a web-based short form to gather feedback on exposure drafts; production of short podcasts on every major proposed and final change in accounting; modification of effective dates on most standards to allow private companies to have more time to learn about changes and adopt them; and distribution of an article on stakeholder’s feedback on what circumstances and perspectives of private companies might warrant differences in accounting standards.
As an example of the FASB’s efforts to work with its private company constituents, Ms. Seidman pointed to the recent standards on goodwill impairment testing. The private companies had told the FASB that testing for goodwill impairment was too complex and expensive. The FASB completed a project on this in September, and the results were amendments approved by the FASB that will allow companies to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether they need to calculate fair value to actually measure impairment. The FASB has also expanded its staff and added two board members, one with some private company background.
“I believe the Private Company plan proposed by the Financial Accounting Foundation Trustees will build on and augment the efforts that the FASB already has undertaken to address private company issues,” Ms. Seidman said. “By establishing a standing Council, with separate oversight by our Trustees, I think it alleviates the concerns I have heard about the changes we have made being temporary, rather than being embedded in the structure and processes of the organization.”
Ms. Seidman believes the “condorsement” process to incorporate International Financial Reporting Standards, as outlined in the Securities and Exchange Commission’s staff paper, has many positive points. She noted there are many remaining differences been GAAP and IFRS, and sometimes standards exist in GAAP but do not in IFRS. She maintains it is appropriate to keep differences until a joint standard is developed. Ms. Seidman stressed the FASB is “committed to pursuing a deliberate process of collaboration with the IASB and other international standardsetting organizations to achieve that goal.” She also pointed out, “Any move toward international standards must maintain or improve upon the high quality of U.S. accounting standards.”
Ms. Seidman said she knows the FAF appreciates the positive comments NASBA Chair Michael Daggett had made about the process that led to the creation of the FAF’s proposal for the establishment of the Private Company Standards Improvement Council (see sbr 10/11) and the FASB’s efforts to address the issues raised during the Blue Ribbon Panel discussions (see sbr 2/11). Her NASBA presentation can be found on www.fasb.org under “Recent Activities & News.”
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