Investors: Help Us Improve Financial Reporting

Why are FASB accounting standards important to investors?

Financial reporting is a communication between a company and those who provide resources to that company. The FASB's goal is to set accounting standards that produce financial information useful in helping investors decide whether to provide resources to a company, and whether the management of that company has made good use of the resources it already has.

While we believe sound financial reporting leads to stronger capital markets by helping investors make informed decisions, it is important to note:
  • The purpose of financial reporting is not to create the illusion of economic stability.
  • The purpose of financial reporting is to provide an objective look at a company’s financial situation.
  • While the FASB is always seeking to improve financial reporting, it carefully weighs the cost of making accounting changes versus the benefit of those changes to investors.
The Importance of the Investor Perspective

To view the FASB’s recent perspectives on issues that impact investors and other users of financial statements, click here to read the recent For the Investor column in the FASB Outlook, and click here to access archived columns.

Why does the FASB want to hear from investors?

In order to improve GAAP, we need to hear directly from investors about the kind of information they need. This input will help the FASB set standards that result in better information for investors and other users of financial reports.

The FASB wants to know what investors think on a variety of issues. Specifically, we want to know whether:
  • Financial statements fail to provide information you need
  • Information is not being presented as clearly as it could be
  • Financial statements include information that is unnecessary
  • Information on the financial statement does not appropriately reflect economics
  • Changes proposed by the FASB will result in a more complete, accurate, or clear communication from a company.
In other words, input is needed at all times, and at all stages of FASB projects.

Obtaining Investor Input: Challenges and Opportunities

What types of investors does the FASB want to hear from?

We realize different financial statement users and investors may have different needs. Therefore, the FASB seeks to hear from ALL types of investors and financial analysts.

For example, we would like to hear from those who have in the past provided, or may in the future provide, resources to a company or a not-for-profit organization. We would also like to hear from anyone who provides investment recommendations or other analysis to the investing community; and those who are present or potential lenders, or present or potential donors.

This wide range of users and investors includes:
  • Portfolio Managers and Analysts from long-only asset managers and long/short hedge funds from both small and large firms
  • Sell-side analysts from large and small firms
  • Accounting analysts from both asset management firms and the sellside
  • Credit rating agency analysts and managers
  • Analysts that work with both equity and debt
  • Members of industry trade groups, such as the CFA Institute.

How Does the FASB Consider Investor Perspectives?

The FASB’s mission is to develop accounting standards that, when faithfully applied, result in financial information that investors and others find useful. For example, accounting standards are useful for investors when deciding to provide resources to a company (such as deciding whether to buy, hold, or sell shares), or to provide credit through loans, guarantees, or other means.

Accounting standards are the result of judgments made by the seven-member FASB:
  • Judgments about the usefulness of the information to investors and the benefits that are expected to result from the information's use
  • Judgments about the expected costs that companies and others will incur to provide the information
  • Judgments about the expected costs of not providing the information (that is, the cost of providing financial information that is less complete, transparent, or understandable).
The FASB does not change and improve accounting standards unless, in its judgment, the expected benefits of the improved information outweigh the anticipated costs of providing it. To make those judgments, Board members (supported by its staff) seek to learn about the perspectives of investors and other users in each aspect of standard setting, including:
  • How and why current financial reports are not meeting user information needs
  • How standards might be changed to better meet those needs
  • After companies have implemented new standards, whether financial reporting improved as expected.
Board members and staff primarily develop their understanding of investor perspectives in two ways:
  • By drawing on their own investing experience, and
  • By actively engaging investors and other users in the standard setting process.
Investor Views in the Standard-Setting Process

How can I find out what projects the FASB is working on?

The website lists each project that the FASB is working on. A complete list of projects is available on the website, and is always being updated with new information.

For projects, we communicate externally in a variety of ways:
  • Each time the Board meets in a public decision-making meeting, it provides observers with a handout that describes the issues being discussed and a summary of significant investor input received. Those meeting handouts are available on the FASB website.
  • Minutes or other summaries of public meetings of standing advisory groups and project-specific working groups are available on the FASB website.
  • A summary of comments received on an Exposure Draft, including views expressed by investors, is prepared and made available on the FASB website.
  • The basis for conclusions section of each Exposure Draft and final Accounting Standards Update describes the various ways the Board obtained user views, what those views were, and how those views influenced its judgments.
The FASB publishes a quarterly e-newsletter, the FASB Outlook, which is designed to keep stakeholders informed about key FASB projects and activities. It presents current accounting and financial reporting issues in a “plain-English,” user-friendly, format designed to provide quick access to stories of interest to the busy professional. The FASB Outlook includes a column, For the Investor, which features Board and staff perspectives on issues that impact investors and other users of financial statements.

How Does the FASB Obtain Investor Perspectives?

Ultimately, decisions about accounting standards are made after weighing a number of factors, including investor usefulness and the cost of providing that information. The Board strives to obtain a complete picture of investor perspectives by considering the input it receives from various sources.



The FASB has created many different channels of communication through which the broad spectrum of investors and other users can provide their views. Those include:
  • Advisory Groups: The FASB has a number of advisory groups consisting of investors, preparers, and auditors. These groups meet periodically to provide input to the FASB on various issues, including:
  • Project-specific working groups: The Board often will create a working group of people with specialized experience to advise it on project-specific standard-setting issues. These groups, which always include investors and other users, meet periodically with the Board and staff.
  • General and project-specific investor outreach: Board members and staff often contact investors directly to solicit their views on financial reporting issues, including whether to add a project to the agenda or to get input on the relative usefulness of alternative approaches to solving particular reporting problems.
  • Input on proposals: A main feature of the Board’s due process is the exposure of proposals for public comment. The exposure process allows anyone interested in financial reporting, including investors, to provide their views on proposed standards.
  • Post-Implementation Review (PIR): The FAF Board of Trustees (which provides oversight to the FASB) reviews FASB standards after they have been in effect for a few years to see if the financial reporting objectives underlying those standards are being met. Investor input is critical to to this process. If you are interested in participating in online surveys about specific standards, please register here. If you’d like to learn more about the PIR process, click here.

How Can I Provide Comments or Participate?

You can provide comments on specific projects electronically to director@fasb.org. As part of its open decision-making process, the FASB asks for public feedback on Discussion Papers, Exposure Drafts, and other proposals issued at various stages of a project. Your submission will become part of the public record.

If you would like to discuss any current FASB projects or proposed projects, or would like to be part of future FASB outreach on issues affecting investors, you can contact Chandy Smith and Jeff Brickman, FASB Investor Liaisons. They can be reached anytime via email, or you can reach them by calling (203) 847-0700, or completing an Investor Interest Form.

Once we find out what information is important to you, the FASB Investor Liaisons will take that information to the FASB, which will think about the most cost-effective way to provide it. Ultimately, decisions about accounting standards are made after weighing a number of factors, including investor usefulness and the cost of providing that information.

The FASB has a number of advisory groups consisting of investors, preparers, and auditors. These groups meet periodically to provide input to the FASB on various issues, including:
View a full list of FASB advisory groups.

If you are interested in serving on one of the advisory groups, please contact the FASB Investor Liaison.

The FAF (FASB’s parent organization) reviews FASB standards after they have been in effect for a few years to see if the financial reporting objectives underlying those standards are being met. This post-implementation review (PIR) process is designed to obtain feedback on the application, usefulness, and effectiveness of FASB standards.

The PIR process provides a unique opportunity for investors to be heard regarding the information they use in their day-to-day research and how that information might be improved. Investor input is critical to assessing whether FASB standards are effective in providing investors and other financial statement users with useful information.

If you are interested in participating in online surveys about specific standards, please register here. If you’d like to learn more about the PIR process, click here.

Educational Resources for Investors

The FASB offers educational resources, tailored for investors, on a variety of financial accounting and reporting topics. These resources can include podcasts, webcasts, videos, fact sheets, and other educational materials.

Please check this section frequently for new resources as they become available.

To view the FASB’s recent perspectives on issues that impact investors and other users of financial statements, click here to read the recent For the Investor column in the FASB Outlook quarterly e-newsletter, and click here to access archived columns.

Resources