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In recent news, the Securities and Exchange Commission’s Investor Advisory Committee released a set of recommendations to improve operations of the Financial Accounting Standards Board (FASB) so that it may better serve investor needs. According to the Committee, investors have been concerned that accounting standard-setting has not kept pace with today’s sources of value and risk, resulting in investors lacking the tools needed to properly value modern companies.

“It appears that a significant portion of the FASB’s limited time and resources are spent on fine-tuning narrow standards rather than addressing more pressing accounting issues, such as cash flows, intangibles, financial statement presentation, labor cost accounting, segment reporting, and measurement of the financial impacts of climate change and energy transition,” the Committee said.

According to an Accounting Today article, the Investor Advisory Committee asked the SEC to establish an Advisory Committee on Accounting Modernization and recommended that it consider potential improvements to financial reporting and help FASB improve its technical understanding of public companies’ internal data infrastructure as well as see FASB expedite its standard-setting, pointing to the prolonged process of implementing the lease accounting and revenue recognition standards. In addition, the Committee would like for FASB to make it more affordable to access its standards. 

SEC Chairman Gary Gensler reacted favorably to the recommendations. “I welcome your recommendations for ways to enhance, in a manner consistent with the Sarbanes-Oxley Act, the responsiveness of our nation’s accounting standards to changing business practices — including by making the Financial Accounting Standard Board’s accounting standards readily available and searchable for the public at no cost,” he said in a statement.

Fortunately, SEC Commissioner Hester Peirce claimed that the FASB was already planning on making some of the recommended changes. “The Financial Accounting Standards Board does have a number of items on its technical and research agendas that respond to investor concerns,” she said in a statement.