FASB ISSUES DRAFT OF DISCLOSURE FRAMEWORK
Norwalk, Conn. -- The Financial Accounting Standards Board has issued a draft of its long-awaited Disclosure Framework, aimed at improving its process for evaluating existing and future disclosure requirements in the notes to financial statements. The document addresses the board's process for identifying relevant information and the limits on information that should be included in notes to financial statements. If approved, the Disclosure Framework would become part of FASB's Conceptual Framework, which provides the foundation for making standard-setting decisions.
Once the board has identified what should be broadly considered based on the concepts, FASB would identify information to be disclosed in the notes that is likely to be helpful to those making decisions about providing resources, and that would be relevant to a significant number of the organizations to which it applies. FASB is encouraging stakeholders to review and provide comment on the new ED by July 14, 2014. It's available for review on www.fasb.org.
FAIR VALUE ACCOUNTING GETS MIXED REVIEW
Norwalk, Conn. -- A post-implementation review of the Financial Accounting Standards Board's fair value measurement standard by FASB's parent organization found that the standard generally met its objectives, even though some investors have difficulty understanding fair value information provided in the financial statements, and their level of satisfaction with the information varies.
Statement No. 157, Fair Value Measurements, was originally issued in 2006 and amended in 2010 after the financial crisis prompted calls for changes in fair value and mark-to-market accounting for financial instruments. It provides a single definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. However, FAS 157 does not change existing U.S. GAAP requirements that specify which items organizations should measure and report at fair value.
FASB VOTES ON INSURANCE ACCOUNTING CHANGES
Norwalk, Conn. -- Members of the Financial Accounting Standards Board voted at a meeting in late February to scale back FASB's convergence efforts on insurance accounting standards with the International Accounting Standards Board.
The convergence project on insurance contracts had been considered one of the four priority projects that FASB and the IASB have been working on as they seek to harmonize U.S. GAAP with International Financial Reporting Standards. However, the project was always less of a priority for FASB than the other three projects - revenue recognition, leasing and financial instruments - as the U.S. already has detailed accounting standards in place for insurance. Meanwhile, FASB and the IASB have struggled to complete the other three projects in their 12-year-long convergence efforts, although a converged standard on revenue recognition is expected in the first half of this year.
"At its February 19 board meeting, the FASB decided to limit the scope of its project on insurance contracts to insurance companies," said spokesperson Christine Klimek. "The FASB also decided to focus on making targeted improvements to existing U.S. GAAP, as opposed to continuing with a comprehensive project on insurance contracts. For short-duration contracts, the board decided to limit the targeted improvements to enhancing disclosures. For long-duration contracts, the board concluded that decisions reached by the IASB in its 2013 exposure draft, Insurance Contracts, should be considered when contemplating improvements to existing U.S. GAAP."
Last June, under outgoing FASB Chair Leslie Seidman, FASB issued an exposure draft with a set of proposed changes in insurance accounting standards, a week after the IASB released its own exposure draft proposals. The new chairman of FASB, Russell Golden, took over last July and the board began holding roundtable discussions with constituents last December to get feedback on the proposed changes. The board learned that there was not much demand in the U.S. for radical changes in the standards.
