FASB’s 2021 Agenda
Richard Jones will take over as chairman of the Financial Accounting Standards Board in December 2020. (FASB).
Jones described a list of high-priority initiatives that he wants to tackle under his leadership after meeting with stakeholders in early 2021.
a wide overview
The FASB is in charge of developing and updating the United States Generally Accepted Accounting Principles (GAAP), which are the standards that many domestic companies use to disclose their financial reports to the outside world. Jones said in a recent interview that the FASB should be "very open" when developing and updating accounting regulations.
He also urged all stakeholders, including investors, CPAs, non-profits, and companies, to work together.
to communicate with the FASB regularly “Participation is an important part of our mission; we need external input to work and set standards,” Jones explained. He aims to gain a better understanding of the world in which stakeholders operate so that he can prioritize initiatives and set comment periods that consider their feedback.
Jones expects to face many obstacles in the coming year, given that his term started during a global pandemic with major economic consequences. Furthermore, he said that technological advancements and a transition to one-party control of Congress and the White House could have an impact on the FASB's future course.
Topics of Interest
Jones' latest interview also sheds light on the FASB's existing project list, which contains the following high priority initiatives.
EBITDA (earnings before interest, taxes, depreciation, and amortization),
environmental, social, and governance (ESG) disclosure laws, are non-GAAP steps.
Presentation of the cash flow statement.
Jones said the FASB and the International Accounting Standards Board have “great communication” when asked about the status of global convergence initiatives (IASB). He intends to collaborate with the IASB on "projects of shared interest" in the future.
Jones emphasized during the interview that FASB requirements are subject to "continuous change." As a result, he intends to perform a post-implementation analysis of the recently adopted revised requirements for revenue, rentals, and credit losses. After being implemented by public companies, these major programs usually require fine-tuning to make the guidelines more effective and to make it easier for smaller organizations to comply with the changes. The evaluation process normally takes several years, and the FASB is just beginning to look at these criteria.
Finally, Jones discussed the effect of technology, such as artificial intelligence and software advancements, on the FASB's standard-setting process. He pointed out that technology has made it easier for investors to access and process vast amounts of data, resulting in a need for more disaggregated reporting..
In recent years, the FASB has been relatively quiet as businesses worked to implement changes to the revenue, rents, and credit losses requirements. With a new chairman in place, the FASB is in a good position to restart rulemaking in key areas.