By Marisa Ruffles. Since 1973, the Financial Accounting Standards Board (FASB) has been tasked with establishing standards of financial accounting that govern the preparation of financial reports by nongovernmental entities. Arguably even more difficult than the task of maintaining and updating accounting standards is guiding and supporting the implementation of these new standards across all reporting companies.
The FASB understands the importance of the two way conversation between preparers and the organization – and the impact feedback can have on successful adoption of new accounting standards. The FASB recently published an article describing their three strategies for the consistent application of new standards and discussed their dedication to facilitating a smooth transition.
Conducting Outreach – The FASB knows that continuing outreach after issuing a standard is critical to educating stakeholders and gaining an understanding of the implementation issues that exist. This helps the board to “understand if application of a new standard is consistent with what the Board intended.”1
According to the article, types of outreach include:
- Meeting individually with preparers, auditors, and regulators
- Addressing preparer organizations in affected industries through small group meetings
- Issuing “Plain-English” educational materials such as videos, articles, and fact sheets
- Discussing implementation progress with FASB’s advisory groups
- Presenting at conferences to explain the new standard
- Participating in CPE provider training sessions to train on how to educate their stakeholders about the standard (“training the trainer”), and
- Conducting CPE webcasts aimed at preparer and auditor audiences.
Transition Resource Group – The TRG works to solicit, analyze, and discuss issues that arise as organizations prepare to implement a new standard. TRG members were selected to represent a wide spectrum of industries, public and private organizations, and perspectives (e.g., financial statement preparers, auditors, and users). The article states that the TRG helps to:
- Avoid having to make revisions to the standard after it is issued
- Reduce diversity in practice, and
- Proactively address preliminary cost-benefit concerns.
The FASB does not plan to create a TRG for every standard, but reserves these resources for more comprehensive standards that will affect broader changes.
Technical Inquiries – The FASB’s Technical Inquiry Service makes it easy for you to submit questions. The Board welcomes your inquiries, as it helps identify recurring issues and address concerns more broadly. Simply select the topic under which your question falls, fill out the appropriate form, and submit!
The Board sees the value of open dialogue and feedback, and it recognizes that the ultimate goal is successful adoption across all companies. By creating multiple lines of communication, it is able to incorporate real world feedback into their processes and make improvements with the shared goal of providing better information to financial statement users.