FASB to revisit accounting priorities

FASB says it will begin to examine the accounting topics it should prioritize for updates and new guidance in 2024, three years after it launched the first investor-focused outreach process. 

The plan to potentially restock the board’s agenda comes as initiatives that are poised to yield a wide range of new or updated accounting standards on several hot-button issues that impact everything from how companies should report their cryptocurrency holdings to tax disclosures — which grew out of the previous outreach process — are now in the home stretch of being finalized.  

In its 2023 Investor Outreach Report, the third annual report on the subject, FASB stated that it has continued to make progress, gaining perspective through 435 investor interactions in the year ended June 30, although that’s down slightly from 485 investor interactions reported in the previous fiscal year.  

The latest report states that FASB must proactively seek feedback from investors because they are not generally focused on the regulator’s accounting standard-setting activities.  

For example, the accounting regulator only received 5% of the feedback from formal comment letters, 29% through the Investor Advisory Committee set up in 2007, and 66% through interviews and other outreach such as through the board’s staff.  

But the report stated that it has made progress on some of the initiatives that investors have asked for in order to make financial reports more transparent and useful. These areas include new disclosures related to the use of supplier finance programs that appeared in many filings companies made in the first quarter with the SEC, and proposed standards now in the works that will require more detailed disclosures of a company’s tax standards and provide new accounting standards that would guide companies to use the fair value accounting for crypto holdings. 

A draft report from the SEC last year criticized the FASB, now in its 50th year, for falling short with providing the new or updated guidance needed by investors to analyze companies in today’s fast-changing markets. 

The report stated that there “is a significant backlog of high-priority accounting topics that need to be addressed (e.g. intangibles and key performance indicators). The nature of public companies has changed dramatically over recent decades, and the FASB has yet to promulgate standards to account for these changes.”