Magazine article The CPA Journal

Adding Value to the FASB Process

Magazine article The CPA Journal

Adding Value to the FASB Process

Article excerpt

These are tough times for an organization-any organization-charged with the responsibility of establishing accounting standards. Rapid technological change, the increasing complexity of business in a global environment, and new developments in the financial markets make a difficult job even more dig cult. The Financial Accounting Standards Board faces a challenge to keep up with the times.

Is it up to that challenge?

Yes, but not without a cold, hard look at its structure and processes.

Our members have described the challenges their businesses face as a result of increasing competition, downsizing, and customers' demands for value-added products and services. Financial executives have learned well the lesson that no business can maintain the status quo and expect to survive into the next century.

The Financial Accounting Standards Board should be no exception.

Early last year the FASB began to develop a strategic plan that will guide it to the year 2000 and beyond. FEI supports this strategic initiative, and we are encouraged that several issues we regard as essential are identified in an early draft of the plan. But we don't know how thoroughly these issues will be addressed, since the FASB has not yet demonstrated an acknowledgment of constituents' concerns or acceptance of the need for change.

One of the major problems the FASB faces is the extraordinary length of time it has taken to resolve a number of issues. To overcome this problem, we recommend that the FASB involve its constituents more fully in the standard setting process and that it develop procedures to assure better control over, and timely competition of, projects.

We also recommend that the FASB make greater use of task forces, which would not only provide the board with the knowledge and insights of a number of experienced individuals, but would make available to the FASB a representation of a broader range of its constituents than is now possible. This would do much to make rules more realistic, which in turn would broaden their acceptance. Giving task forces a more substantive role in the development of standards, coupled with a reorganization of the FASB staff, would make the board more efficient and effective. …

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