The SEC’s Chief Accountant Paul Munter, released a statement “Accounting Standard Setting in a Rapidly Evolving Business Environment: A Focus on the Timely Delivery of Investor Priorities,” discussing improvements to Financial Accounting Foundation (“FAF”) and the Financial Accounting Standards Board (“FASB”) accounting standards and standard-setting processes since the SEC’s statement last year.
Since last year, the FASB agendas have been reprioritized to focus on investor and stakeholder priorities. These reprioritizations have resulted from the 2021 FASB Agenda Consultation Report, which identified the top priority topics identified by investors: (1) Disaggregation of Financial Reporting Information; (2) Improvements to the Statement of Cash Flows; (3) Environmental, Social, and Governance (“ESG”)-Related Transactions and Disclosures; (4) Intangible Assets; (5) Financial Key Performance Indicators and Non-GAAP Metrics; (6) Digital Assets; and (7) Enhanced Income Tax Disclosures. Munter acknowledged that the FASB has made progress with many of its reprioritized projects; however, he states that further action is needed.
Specifically, Munter emphasizes that due to the rapidly changing business and economic environment, timely response by standard setters to improve the quality of financial accounting and reporting standards is essential. To improve the standard setting process he encourages increased efficiency, effectiveness and transparency from the FAF and FASB and a focus on achievable standard-setting projects as opposed to lengthy large-scale projects. He reiterates that standard setting should be focused on the information needs of investors and that implementation costs should not be the sole driving force in the standard setting priorities or processes.