The Financial Accounting Standards Board (FASB) has asked stakeholders to identify issues that should be on the board’s agenda going forward. What major area would you like to see the FASB focus on in coming years?
 

ROBERT M. ROLLMANN
Partner, Harrison

Prior to the formation of the Private Company Council (PCC), the FASB historically had a sort of “one-size-fits-all” approach to GAAP (generally accepted accounting principles), especially when it comes to private companies. Over the past few years, the FASB has worked to simplify some areas of GAAP for both private and public entities and, in recent years, the PCC’s initiatives have certainly eased the cost and complexity of complying with GAAP for private entities. But, at times, in the course of FASB deliberations on new ASUs or changes to existing GAAP for private companies, they still have a knee-jerk reaction of “more is better,” and you wind up with situations where the financial statements have a paragraph or two telling the reader about what the company does, and several pages of disclosures in areas like defined benefit plans and fair value measurement and derivatives, just to name a few! I frequently question whether such extensive disclosures are of value to the reader of private company financial statements. At some point, the FASB needs to step back and ask if this is really serving the interests of the majority of private companies, as opposed to the small number of analysts who want that information. 

Other areas of concern include matters that are particularly onerous to private companies but represent a significant burden for public companies, too, such as accounting for income taxes, derivative and hedge accounting rule requirements, defined benefit plan disclosures and the new revenue recognition standard. The board came out with it last year, but it’s obvious that it’s going to be problematic. It has the potential to be a very complex standard that will affect nearly every entity—especially private companies that don’t have the same depth of resources as public companies. 

PAUL E. BECHT
Partner, Melville

I’m really interested in what the board is doing as far as simplifying financial reporting, to make things understandable for the majority of companies out there that aren’t publicly traded and don’t necessarily need the complex financial statements that some of the larger corporations do. There’s so much that has to be considered when putting together a financial statement—if we could just make the accounting simpler, including footnote disclosures, and in plain English, it would reduce compliance costs and make life easier for both preparers and readers. A good example is the proposed lease standard. Right now, companies report many of their leases as operating leases and it’s a fairly simple exercise, but when the new pronouncement comes out, that will change. I’d like to see the FASB try to simplify reporting for private companies because the standards, as proposed, will just add one more layer of complexity to the balance sheets, which, ultimately, isn’t helpful. 

IRALMA POZO
Adjunct Lecturer, New York 

There are a few things the FASB should give its attention to. First, several issues still need to be addressed within the convergence project—what immediately comes to mind, for example, is revenue recognition. From reading articles, listening to CPE sessions and talking to CFOs, it’s clear to me that there are still a lot of concerns about how the standard will affect the bottom line, since it impacts a vital part of business operations. A lot of the concerns I’m hearing are about how complex it all is, which ties into another major issue that the FASB should concentrate on: the complexity of their accounting literature in general, especially for smaller entities. Many times, it’s just overwhelming, especially when you’re not a Fortune 500 company with the resources of a large accounting team. People are just trying to run their businesses but, often, all the disclosure requirements seriously impact that. Furthermore, the quality of the financial reporting itself can suffer when you have all this complexity without the resources to address it.

JOHN A. BASILE
Partner, New York 

As a practicing professional, I would like to see the FASB focus more on accounting for small and medium-sized enterprises. “One-size-fits-all” accounting does not always provide the most relevant information to financial statement users. Owners, lenders and others require clear and concise financial data relating to a company’s financial condition, operations, and cash flows and related disclosures. While the FASB has been moving in this direction with respect to goodwill accounting and other areas, more needs to be done, especially relating to fair value matters, income taxes and disclosures.

The opinions expressed in this section are those of the individual and should not be taken as representative of the firm for which he or she works.