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State Board Report

January 2015

The Sustainability Accounting Standards Board issued in December “provisional standards” for 10 industries with the goal of assisting corporations comply with Regulation S-K, to disclose material information in the Form 10-K. Industries covered include: advertising and marketing; cable and satellite; casinos and gaming; cruise lines; education; hotels and lodging; leisure facilities; media production and distribution; professional services; and restaurants. The SASB, an independent 501(c)3 organization, explains these standards will “remain provisional for at least one year after the issuance date.” The SASB invites feedback through its public comment portal.

Disclosure under SASB standards is voluntary, the SASB makes clear on its website. They explain: “SASB Standards are intended to be aligned with the principles of materiality enforced by the SEC. However, SASB is not affiliated with or endorsed by the SEC or other entities governing financial reporting, such as FASB, GASB, or IASB.”

NASBA Standard-Setting Advisory Committee Chair Gaylen R. Hansen noted that unlike COSO, which also sets out a voluntary framework but has been recognized by the SEC as authoritative, the SASB has not. The NASBA Committee, newly established this year by NASBA Chair Walter Davenport, will be reviewing how the work of this developing organization might impact the State Boards’ licensees. The Committee’s charge is to: “Monitor and objectively evaluate processes of standard setters on behalf of Boards of Accountancy, recommending improvements when warranted. Proactively advise Boards and NASBA leadership regarding these activities.”

PwC US has contributed $1 million to the SASB along with $1.4 million in pro bono services and loaned employee support. The SASB’s Board of Directors is chaired by Michael R. Bloomberg, founder of Bloomberg LP, and includes as vice chair Mary Schapiro, former SEC chairman; Robert Herz, former FASB chairman; Robert G. Eccles, professor of management practice at Harvard Business School; and other thought leaders in the business world. Jean Rogers is the CEO.

Founded in 2010, the SASB believes its guidance is needed because it is designed for concise disclosure in the Form 10-K or 20-F. The SASB website states: “SASB’s sustainability accounting standards are the first that truly enable comparison of peer performance and benchmarking within an industry. SASB’s unique focus on U.S. public equities, approach to industry-specific issues and disclosure of minimum performance standards differentiates it from existing sustainability frameworks.”

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