In December 2020, Richard Jones stepped up as chairman of the Financial Accounting Standards Board (FASB). After meeting with stakeholders in early 2021, Jones identified a list of high-priority projects that he plans to tackle under his leadership.
The FASB is responsible for creating and updating U.S. Generally Accepted Accounting Principles (GAAP), the rules that many domestic businesses use to report their financial results externally. In a recent interview, Jones said he wants the FASB to be “very transparent” when making and reviewing accounting rules.
He also encouraged stakeholders — including investors, CPAs, not-for-profits and businesses — to actively engage with the FASB. “Engagement is a critical part of our mission; we need that external feedback to function and set standards,” said Jones. His goal is to understand the environment in which stakeholders are operating and consider their input when prioritizing projects and setting comment periods.
In the coming year, Jones expects to face many challenges, because his tenure began amid a global pandemic that has had significant economic impacts. Moreover, he indicated that technological changes and a shift to one-party control of Congress and the White House may affect the future direction of the FASB.
Jones’ recent interview also sheds light on the FASB’s current agenda, which includes the following high-priority projects:
When asked about the status of global convergence projects, Jones said the FASB has “great communication” with the International Accounting Standards Board (IASB). He plans to continue working with the IASB on “projects of common interest.”
During the interview, Jones stressed that FASB standards are subject to “continuous improvement.” Accordingly, he plans to conduct a post-implementation review of the updated standards for revenue, leases and credit losses that have been implemented in recent years. These types of large projects typically require fine-tuning after they’re adopted by public companies to make the standards more effective and to make it easier for smaller entities to comply with the changes. The review process usually takes multiple years, and the FASB is just in the initial stages of reviewing these standards.
Finally, Jones shared his thoughts on the impact that technology — such as artificial intelligence and software developments — will have on the way the FASB sets standards. He noted that technology has helped investors access and process large volumes of data, which has led to a demand for additional, more-disaggregated reporting.
The FASB has been fairly quiet in the last few years, as companies worked to adopt the updates to the revenue, leases and credit losses standards. Now, with a new chairman at the helm, the FASB is positioned to resume rulemaking activities in key areas. Contact us to learn about the latest developments under GAAP.