Reflections of a New FASB Member:
Why I Wanted to Serve on the Board
By Christine Botosan, FASB Member
Second, I respect the power of process, broad input, and collaboration in robust decision-making.
And finally, participating on the Board offers me unparalleled opportunities to ponder challenging questions, learn from others, contribute my expertise, and devise solutions with real impact.
I always told my students that sound economic decisions, which are foundational to a prosperous society, are not possible in the absence of high quality, useful financial information.When serving as a professor of accounting, I attempted to ignite in students a passion for accounting by stressing the essential role it plays in the global economy. I always told my students that sound economic decisions, which are foundational to a prosperous society, are not possible in the absence of high quality, useful financial information.
I regard financial reporting as a communication system, which, to be effective, requires educated producers and consumers of financial reporting information. Thus, the second part of the FASB’s mission, to “educate stakeholders on how to effectively understand and implement those standards,” resonates deeply with me. I am fortunate to have joined an organization guided by a mission to which I have a deep and abiding conviction.
I also appreciate the well-developed and time-tested standard-setting process that has served the Board and its stakeholders for more than forty years. The Board actively seeks diverse views through its advisory groups, outreach to stakeholders, and public requests for input on proposals.
The opportunity to address challenging issues, learn from others, and formulate solutions collaboratively is what originally led me to an academic path—and attracted me to this new role as standard setter.Lastly, the extent of constructive collaboration I have observed among the Board members and staff, and with domestic and international external stakeholders, is simply remarkable. The opportunity to address challenging issues, learn from others, and formulate solutions collaboratively is what originally led me to an academic path—and attracted me to this new role as standard setter.
While I embark on my first term with keen anticipation, I also must admit to a healthy dose of trepidation. As Tom Linsmeier prepared to depart from the Board, he reflected in a prior issue that although much had been accomplished during his decade on the Board, many thorny issues remain.
There are three specific areas in which I hope we can gain some ground on during my time on the Board:
- The conceptual framework (presentation and measurement) is integral to the Board’s ability to develop sound, internally consistent accounting principles. Our agenda includes several key conceptual framework projects on measurement, presentation, and disclosure. Bringing these projects to a successful close and the ultimate completion of the conceptual framework is a formidable challenge, but necessary to realize the Board’s mission.
- Improvements to the financial performance reporting model can also bear significant fruit in terms of providing useful information to investors and other users. Improvements will be hard-won, but offer the compelling promise of significant rewards.
- Liabilities and equity continues to be ripe for discussion and debate. The element definitions, distinguishing between liabilities and equity, and the accounting for financial instruments with characteristics of both are just some of the thorny questions yet to be adequately addressed.
For example, in 1936, “A Tentative Statement of Accounting Principles Affecting Corporate Reports” was published in The Accounting Review. It included proposals on asset measurement, performance reporting, and certain aspects of the definition of equity.
But we should not despair that everything old is new again.But we should not despair that everything old is new again. A comparison of financial statements from the 1930’s to those of today would resoundingly demonstrate the significant gains made in improving financial accounting and reporting standards and providing useful financial information to investors and other users.
Countless stakeholders, Board members, and staff have contributed to that progress over the decades of development of modern accounting and reporting. I feel privileged to join the team and play my part.