FASB foresees a year of discussion

The Financial Accounting Standards Board is heading into a year in which the ball of due process will spend a lot of time in the court of the board's constituents.Between New Year's Day and early spring, the board may have as many as 11 documents issued for public comment, with a couple more out by summer. Three final documents may be issued in the first quarter, but they're the only pronouncements expected before 2009.

Comments on the exposure documents will have to bear in mind the recent Securities and Exchange Commission decision to allow foreign companies to use un-reconciled International Financial Reporting Standards when registering for American securities markets.

U.S. standards will need to be compared with - and converged with - international standards as never before.

The philosophers of accountancy will have their eyes on the conceptual framework project that's being hammered out in conjunction with the International Accounting Standards Board.

After analyzing comments that have been received on a preliminary views document on the objectives of financial accounting and the characteristics of decision-useful information, the boards expect to issue an exposure draft of a proposed concept statement on objectives in the first quarter, with a final statement possible by the end of 2008.

In that same time frame, the boards will also receive comments on a preliminary views document on the reporting entity. The document describes the reporting entity as a circumscribed area of business activity of interest to present and potential investors and creditors.

By the end of 2008, the boards also hope to issue two discussion documents: one on measurement issues, and one defining the basic elements of financial statements and criteria for recognition.

"Our goal for the year is to reach preliminary views on the majority of the fundamental concepts ...," said FASB director of major projects Suzanne Bielstein, "and we'll be at varying stages of receiving feedback on all of them."

As FASB steps up its efforts to converge U.S. generally accepted accounting principles with IFRS, the boards will be analyzing comments on a proposed standard on earnings per share and a PV document on financial instruments with characteristics of equities that was issued in late 2007. The EPS project primarily aims to determine a common denominator for EPS calculations.

The boards are also preparing to issue two mid-year PVs on guidance on statement presentation and revenue recognition. "I think most board members believe the project on presentation is one of the more important on our agenda," Bielstein said. "The board has never looked comprehensively at how information should be presented in the basic financial statements."

The project will address presentation in all financial statements: financial position, cash flow, income, and changes in equity. Depending on comments and deliberations, the board may be able to propose a standard in late 2009 or sometime in 2010, Bielstein said.

The project on revenue recognition is attempting to bring together over 200 pronouncements. The boards are considering two approaches to revenue recognition: fair value measurement, and a method that measures revenue by consideration received from a customer.

The first quarter will also see some kind of initial discussion document on financial instruments. It is expected to discuss problems with current reporting practices, the problems and potentials of comprehensive fair value measurement, and how FASB might improve reporting. "Our financial instruments guidance was developed in a piecemeal fashion over many years," Bielstein said. "We have a lot of complexity from the investors' standpoint. The same instrument can be accounted for five or six different ways."

In 2008, FASB will also begin deliberations on accounting for the trading of allowances for the emission of greenhouse gases and other pollutants. As emissions allowances are more widely mandated, trading has become more common, and a secondary market is now active.

FASB also plans to issue exposure documents on leasing, income tax deferrals, and transfers of financial assets. Final statements on derivatives disclosures, financial guarantee insurance, and repurchase agreements are slated for the first quarter.