The FASB plans to determine whether it still wants to pursue 20 of the projects on its active technical agenda that were added under a different mix of board members than are serving today, new board Chairman Richard Jones said.
Jones told FASB’s trustees on Aug. 18, 2020, the FASB “will need to spend some time reconfirming the board’s interest in pursuing those projects as well as their direction.”
Project decisions are made by board vote.
Jones took up the chairmanship post July 1, following the departure of Russell Golden who left due to term limits. Board member Harold Schroeder will also leave the board next year due to term limits.
Currently, the FASB has 30 projects on its active agenda, and nine on its research agenda, according to its agenda summary.
FASB’s technical agenda places its projects under four categories: 1) framework projects—comprising efforts to complete the conceptual framework for accounting standards; 2) broad recognition and measurement topics; 3) narrow recognition and measurement topics; and 4) presentation and disclosure projects.
In light of the COVID-19 pandemic, the board has been focused on understanding what accounting standards are working well and issues most challenging for companies.
These days resource-strapped companies have had to consider accounting standards that are not on the beaten path, Jones said. The board therefore has had to tap professional trade organizations to spread awareness on how to apply relevant standards.
“One item of note is some of our stakeholders are facing the first economic downturn of their careers and the standards that come into play in these situations are not the most familiar to them,” said Jones. “We’ve been working with outside organizations, including the AICPA to increase awareness of those standards and how they are applied in the current environment.”
COVID-19, the respiratory disease caused by a new coronavirus strain, has created a global and national pandemic since March. Companies issued work-from-home mandates to help stem the effects of the virus. The pandemic has had a profound impact on the U.S. economy. Millions of jobs have been lost; thousands of people have died. Though stay-in-place and work-from-home restrictions have been lifting in the U.S., there is a level of uncertainty about what will happen for the remainder of the year.
The board’s response during these times is especially critical, the FASB’s trustee organization signaled. The economic effects of the pandemic are unprecedented and confidence in quality financial reporting is essential to the economy, Kathleen Casey, chair of the Financial Accounting Foundation (FAF), said at the meeting.
“As our country continues to face the unprecedented economic effects of this pandemic, we all share a common purpose in preserving confidence in accounting standard-setting and the quality of financial reporting that support the transparency and information flow so essential to our capital markets and economy,” Casey said.
Accounting rules holding up
An important shift the FASB made in response to the pandemic was to change its focus from issuing major new standards toward helping companies navigate the effects of the pandemic. The board moved projects that were not time-sensitive to the second half of its agenda, including its leases roundtable.
Earlier this year, to help companies navigate the effects of the virus, FASB issued several question and answer documents and delayed some major accounting standards.
Specifically, a staff a question and answer document (Q&A) was issued in relation to the disruptive effects of COVID-19 on cash flow hedge accounting. Topic 815, Derivatives and Hedging, provides guidance on when to discontinue cash flow hedge accounting and when and how to reclassify amounts deferred in accumulated other comprehensive income. Companies had asked how the postponement or cancellation of forecasted transactions related to the effects of the COVID-19 pandemic should be considered when applying cash flow hedge accounting under Topic 815.
A separate Q&A was also issued on the application of Topic 842, Leases, for lease concessions related to the effects of the pandemic.
Moreover, delays on the effective dates of lease accounting and revenue recognition rules were granted to private companies. And a package of delays have been proposed for all companies that need to apply long-term insurance accounting rules.
Jones reiterated that the FASB standards have held up well under the current economic stress and the board will continue to study what can be improved to reduce costs and increase benefits from its existing or proposed standards.
“We will continue to prioritize activities related to emerging issues on standards that are not yet effective, carefully considering comment period and effective dates for any new standards,” he said.
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