The Financial Accounting Foundation launched an updated Web site Monday in conjunction with new leaders at the two standard-setting boards it oversees, the Financial Accounting Standards Board and the Governmental Accounting Standards Board, while also reviving an old dispute with the American Institute for CPAs over financial reporting standards for private companies.
On Monday, Russell Golden succeeded Leslie Seidman as FASB chairman, while David Vaudt succeeded Robert Attmore as chairman of GASB (see FASB and GASB Chairs Retiring). The FAF revamped the Web site for FASB in April to commemorate the FAF’s 40th anniversary and announced plans to redesign the GASB and FAF sites as well (see FAF and FASB Revamp Web Sites for 40th Anniversary).
The new FAF site that launched Monday features more user-friendly navigation and new “plain English” educational resources that provide extensive background on financial accounting and reporting standard-setting and related issues. GASB will unveil its redesigned Web site later this summer.
The new FAF site is designed to be the primary source of news and information about the FAF and its activities. The site includes videos and other new content aimed at a wide range of users, including those who are unfamiliar with the FAF and its activities. For example, the debut video features interviews by FAF president and CEO Teresa S. Polley with the new board chairs Golden and Vaudt.
The Web site also provides educational material and articles on the organization and processes of the FAF, FASB and GASB; the roles the FAF, FASB, and GASB have in establishing and improving financial accounting standards and U.S. accounting standards. Other topics include policy issues involving international accounting, private companies, U.S. GAAP, the U.S. GAAP Taxonomy, and issues on which the FAF, FASB, and GASB leaders have testified before Congress.
“The new FAF Web site is an intuitive, user-friendly platform where visitors can find what they need to know about the standard-setting process and the roles of the FAF, the FASB and the GASB in establishing financial reporting standards,” Polley said in a statement. “The site also provides the latest updates on important FAF initiatives, including the Post-Implementation Review process, decisions and activities of the Board of Trustees, and public policy initiatives that affect U.S. standard setting.”
The new FAF Web site also integrates the FAF, FASB and GASB’s new branding and logos, which were announced in April. The site also features an interactive digital timeline telling the story of the FAF, FASB and GASB through photos, videos and quotes from the past 40 years. The new site was designed by Ball & Chain, LLC, a firm based in Stamford, Conn.
Reviving AICPA Dispute
For the new site, Polley has also written a new “From the President’s Desk” column in which she criticizes the American Institute of CPAs’ recently unveiled Financial Reporting Framework for Small and Medium-sized Entities, or FRF for SMEs. She advises accountants at private companies to await FASB’s work with the recently established Private Company Council, which is also overseen by the FAF and will help it recommend and develop differences in U.S. GAAP standards for private companies. FRF for SMEs is meant to be a non-GAAP Other Comprehensive Basis of Accounting, or OCBOA, that small companies can use if they don't need to fully comply with GAAP.
Polley noted that both the National Association of State Boards of Accountancy and the Institute of Management Accountants had also issued critical statements about FRF for SMEs (see NASBA Tells Private Companies: Don’t Use AICPA Financial Reporting Framework). “The AICPA’s effort has not been without controversy,” she wrote. “Both the National Association of State Boards of Accountancy and the Institute of Management Accountants recently issued public statements critical of the AICPA framework.”
The AICPA has defended FRF for SMEs, with AICPA president and CEO Barry Melancon pointing out in a letter to the leaders of the state CPA societies last month that NASBA has long opposed its efforts to introduce such a framework (see AICPA Enlists Support of State CPA Societies in Spat with NASBA over FRF for SMEs). The AICPA, NASBA and FAF were all parts of the Blue-Ribbon Panel on Standard Setting for Private Companies, whose report led to the creation of the PCC.
“As you may have seen earlier today, NASBA has issued a press release indicating its support of GAAP for private companies and its opposition to the AICPA’s recently released FRF for SMEs,” Melancon wrote “This announcement was not a surprise, as NASBA had previously raised objections to our efforts to offer this alternative, non-GAAP option to the small business community.”
However, Polley contended that NASBA and the IMA had made some valid points. “Together, NASBA and IMA represent a significant cross-section of financial reporting stakeholders,” she wrote. “They have raised important concerns—and I believe that everyone who has an interest in private company accounting issues should examine those concerns carefully and closely. I also believe it is incumbent on the FAF to clarify its position on this issue and to offer some historical context to the discussion.”
Polley said that the FAF had not yet taken any official position on the AICPA’s FRF for SMEs since it was released, although she acknowledged that she had initially issued a statement of support back when the AICPA first announced that it planned to develop such a framework (see New Private Company Standards Council Established).
“Contrary to what you may have heard, neither the FAF nor the FASB to date has taken a position on the substance of the AICPA’s special purpose framework,” she wrote. “However, we have expressed our concern about the possibility that some may confuse the framework with GAAP, particularly because aspects of the final framework, as I noted earlier, resemble GAAP in a manner that was never an issue with other forms of OCBOA. Because of this concern, we will continue to monitor developments in this area, and continue our dialogue with a wide range of stakeholders, to ensure that the potential for confusion is minimized.”
The AICPA responded that it found the statements puzzling. "The opposition to appropriate financial reporting choices for private business owners is puzzling," the AICPA said in comments forwarded by a spokesperson. "We are committed to relevant answers for the private business community. And we are confident that the market, not those defending the status quo, will decide. We have received many expressions of support from stakeholders who recognize the value of the FRF for SMEs for Main Street businesses. The FRF for SMEs is not GAAP and we have made that clear. It is another comprehensive basis of accounting, a concept that's long been established in accounting processes."
Polley noted that FASB would release three alternatives Monday within U.S. GAAP proposed by the PCC to address concerns of private company stakeholders. The proposals involve accounting for intangible assets acquired in business combinations; goodwill; and certain types of interest rate swaps. FASB endorsed the three proposals last month, but didn’t formally release them (see FASB Backs Proposals for Simplifying Private Company Accounting and FASB Issues Proposals for Private Company Accounting).