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

Agenda Setting 101

High-quality accounting standards begin with a strong technical agenda. To develop the right accounting solutions, the FASB must first identify the right accounting issues.

But how do we determine the “right” accounting issues to add to our technical agenda?

Where do agenda requests originate?

Agenda requests come to us from many sources. Often, it starts with you. Your letters, comments, and even questions you submit through our technical inquiry service point us towards issues or standards we may need to improve.
Agenda requests come to us from many sources. Often, it starts with you

In some cases, we reach out to you first through an Invitation to Comment (ITC). For example, in 2016, we issued an ITC that asked stakeholders to weigh in on the Board’s future agenda.  What we learned during that process led to our current agenda projects on distinguishing liabilities from equity and segment reporting.

We consider agenda requests from all sources, including:
  • The U.S. Securities and Exchange Commission (SEC) and other regulators, including the Public Company Accounting Oversight Board (PCAOB) and banking regulators
  • FASB advisory councils and committees that include representation from a broad base of stakeholders
  • Our liaison groups and other professional organizations, including accounting firms, state CPA societies, the AICPA, and formal liaison groups, including user groups, preparer groups, auditor groups, industry groups, and academic groups, and
  • The FASB itself, in response to changes in economic conditions, accounting practices, and law.

What’s our criteria for adding a project to the FASB technical agenda?

When we receive an agenda request, we set out to answer some key questions, including:
  1. Is there an identifiable and sufficiently pervasive need to improve GAAP? In other words, what improvement is needed?  And what’s the extent to which it affects users, preparers, auditors, and others?
  2. Are there technically feasible solutions and are the perceived benefits of those solutions likely to justify the expected costs of change? This is an important consideration, as we want to make sure we use our time efficiently and effectively on the highest priority projects that we will be able to complete.
  3. Does this issue have an identifiable scope? Can we effectively identify the scope of the potential project?
Sometimes, the answers to these questions are relatively clear.  In that case, the Board will vote on a potential agenda project in a public meeting. If four or more FASB members vote in favor, we add the project to our technical agenda.

When we can’t answer these questions to our satisfaction, the Board may ask the staff to perform more research (that may include stakeholder outreach) to better understand the issue. Or the project may be added to our formal research agenda, which allows the staff to delve more deeply into these questions. Based on what we learn, we may—or may not—decide to promote the project to our technical agenda.

Part of our job is to identify the right projects for our agenda. And that means making hard but necessary choices. We strive to improve how we manage the pace of change by managing it at the beginning of the process, not the end—and that starts with our agenda-setting process.

That said, I encourage you to keep sharing your concerns, priorities, and issues with us. We can’t make these important decisions without you.

The views expressed in this article do not necessarily reflect the views of the FASB. Official positions of the FASB are arrived at only after extensive due process and deliberation.