Tampa, Fla. (Feb. 6, 2004) -- A major benefit of Sarbanes-Oxley is that the act has elevated the national focus on sound financial reporting, the chairman of the Financial Accounting Standards Board told roughly 200 business leaders here.
As part of its efforts to develop a sound, uniform financial reporting system, chairman Robert Herz said that the Norwalk, Conn.-based accounting standards setter has designated three strategic objectives: to revamp the overall financial reporting system by improving and simplifying U.S. GAAP; to move toward a more principles-based approach to accounting; and to accomplish international convergence.
“FASB is not geared to a particular goal, but focused on improving financial reporting overall to benefit everyone on the supply chain, from providers to users,” Herz said. Herz’s remarks came last week at the University of Tampa during a discussion on the challenges and opportunities of financial reporting for public and private companies. The goal of the event, a collaboration by the university, the Financial Valuation Group, Financial Executives International and KnowledgeLeaders, was to provide area business leaders with a better understanding of the standards and how to apply them in their daily operations.
“Moving toward a more principles-based approach will take time, cultural changes and system changes,” said Herz. “U.K. standards are much more principles-based, but in the U.S., we prefer more hard-based rules. It’s safer that way.” Herz added that FASB is working with the International Accounting Standards Board “to inventory our existing differences,” noting that, “there are hundreds of them.”
“We need a system that is simpler, more uniform and better than what we each have separately,” Herz told the group. As an example, he noted that in the U.S. there are currently 50 different models for revenue recognition, while he said the European model has “about a paragraph.”
“This project is like taking on the task of simplifying the tax code,” Herz said of the revenue recognition project. “It is a full-time job for my staff.” He said an exposure draft on the topic is expected by year-end.
-- WebCPA staff
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