From the Chairman's Desk:
By Russell G. Golden, FASB Chairman

Adjusting for the Pace of Change


Each year, my FASB colleagues and I speak at many accounting and industry conferences across the country. In addition to updating audiences on our key projects, we use these opportunities to engage with stakeholders like you who are “in the trenches” of implementing our standards or using the financial information that results from our standards on a day-to-day basis.

And what seems to be on most of your minds lately is the pace of accounting change. Change and its impacts are on our minds, too.
An important part of the standard-setting process is deciding when new standards should be effective.

In the past few years, the FASB issued major new standards on revenue recognition, leases, credit losses, and not-for-profit financial reporting. We also made narrow-scope improvements to existing guidance as part of our ongoing simplification initiative, as well as improvements to guidance for employee benefit plan reporting, and other improvements in response to requests from stakeholders. A new hedging standard is on the way in the coming weeks, and we are beginning the final phase of our project on long-duration insurance contracts.

An important part of the standard-setting process is deciding when new standards should be effective. While it’s always important, it is particularly so when the Board issues several major standards within a few years of each other.

To manage the pace of change when there are several standards coming out at the same time, the FASB:
  • Asks questions in our Exposure Drafts about how much time is needed to implement standards
  • Staggers the effective dates of our major new standards to give organizations sufficient time to understand and implement them
  • Seeks to understand synergies between standards, such as our leases and revenue recognition standards, and
  • Allows private companies and not-for-profit organizations a deferral beyond the date required for public companies.
We’re also proactively focused on managing the pace of future broad accounting changes. The FASB will continue to improve GAAP to address narrow or incremental issues. We also will continue to build the conceptual framework to help us resolve future accounting and reporting questions. But when we look at planning our future agenda to address larger, broader areas of financial reporting, we need to ensure that we add the right projects to our agenda, at the right time.
When we look at planning our future agenda to address larger, broader areas of financial reporting, we need to ensure that we add the right projects to our agenda, at the right time.

Last summer, we issued an Invitation to Comment to get your feedback on what accounting topics you think we should be addressing, why, and in what priority. This was a new exercise for us, and a successful one.

We received valuable feedback via comment letters, outreach meetings, and a roundtable. Many stakeholders suggested improvements the FASB should make to financial reporting.

Some stakeholders believe we should only work on implementation support until all these major standards are effective. For example, a few preparers that have resource constraints and need to enhance their processes and internal controls suggested that we devote our resources solely to supporting implementation of those standards (see a prior column here on the many ways the FASB addresses implementation issues).


The Board plans to discuss the feedback we received from the Invitation to Comment in the third quarter. While it’s too early to say what issues will be addressed (and when), I can say that the priorities that emerged from stakeholder input were (in order):
  1. Liabilities and equity
  2. Performance reporting
  3. Intangibles
  4. Pensions and other post-employment benefits.
Based on your preliminary input about the pace of change and our limited resources, it is highly unlikely all these topics will be added to our agenda at the same time.
Given the current pace of financial reporting change, I realize you might think addressing four projects on priority issues at the same time seems daunting. But I want to assure you that, based on your preliminary input about the pace of change and our limited resources, it is highly unlikely all these topics will be added to our agenda at the same time.

Once the Board ultimately settles on its new agenda, it may take several years to complete any comprehensive changes, including its research and drafting work, with opportunities for stakeholder input along the way. And then, depending on the extent of change, the effective date could likely be one to two years after completion. This extended timetable provides our stakeholders a significant gap after the current wave of change.

This exercise in determining the FASB’s future agenda has reinforced the importance of your feedback in helping us manage the pace of change. Your continual input will help us refine and improve our standard-setting process for years to come.