The Financial Reporting Executive Committee (FinREC) of the American Institute of CPAs (AICPA) wrote that it believes the Financial Accounting Standards Board’s (FASB) survey outreach on its agenda was productive. The FinREC letter was in response to FASB’s Invitation to Comment (ITC) AgendaConsultation. The ITC lists potential financial reporting and accounting issues and possible approaches in four areas: 1) intangible assets, including research and development; 2) pensions and other postretirement benefit plans; 3) distinguishing liabilities from equity, and 4) reporting performance and cash flows. The ITC is an opportunity for stakeholders to let FASB know what topics they believe should be on the Board’s agenda for the next several years.
In its October 20 comment letter, FinREC stated, “FinREC believes all of the issues described in the ITC have the potential for significant targeted improvements. We also believe that the pre-agenda research will be critical to help the Board determine what is achievable in a reasonable time frame.”
FinREC outlined specific recommendations for the topical areas of distinguishing liabilities from equity and for performance reporting. FinREC wrote that a majority of its members believes that the area of distinguishing liabilities from equity should be FASB’s highest priority among the identified areas. Furthermore, the letter stated, such a project should include a fundamental reexamination of the current model with the goal of developing a principle that would apply broadly to all such decisions. Regarding performance reporting, FinREC stated that FASB should continue its present research project.
FinREC also commented that it believes FASB should focus on targeted improvements in the area of pensions. FinREC cited as an example that improvements could be made to accounting for cash balance plans and hybrid plans.