FASB Chairman Pushes for Consistency in corporate disclosures
October 31, 2013 Leave a comment
October 30, 2013, 4:18 PM ET
FASB Chairman Pushes for Consistency
By Emily Chasan
Senior Editor
The top U.S. accounting rule maker signaled this week he wants to focus on improving consistency in corporate disclosures, as the U.S. standard setter starts to move in a new direction. The Financial Accounting Standards Board is wrapping up a decade-long effort to bridge U.S. and international standards. Now Russell Golden, the new FASB chairman, intends to make it easier for investors to compare companies in different sectors with specific financial reporting needs. The board’s objective is to ensure investors have the information they need to make decisions about how to allocate capital among companies.“That aspect of our mission implies consistency and argues against too much change,” Mr. Golden said in commentsto a meeting of the National Association of State Boards of Accountancy in Hawaii.
In the U.S., the board is currently working on a framework to improve, coordinate and possibly reduce the volume of corporate disclosures. Last month, a FASB advisory group concluded this was the board’s most pressing need. U.S. rules must evolve to remain relevant as the economy changes, he said.
Throughout history this balance between the consistency and relevance of U.S. Generally Accepted Accounting Principles (GAAP) has ebbed and flowed, Mr. Golden said. More standardized accounting rules helped develop railroads, steel manufacturing and automobile companies, while a failure of comparable information led to the Great Depression.
In today’s Internet economy, with more access to financial information than ever before, Mr. Golden said comparable and relevant financial data is crucial to keeping the cost of capital low for companies around the world. Mr. Golden said the board will still be active in the development of International Financial Reporting Standards.
“Even as we strive to minimize differences,” he said, “we believe that we must first serve the users of GAAP financial statements, while making sure that GAAP illuminates any differences whenever and wherever they may occur.”
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