Consultation Document on Internationally Applicable Rules for Nonprofits to be Published
A collaborative effort of various accounting groups worldwide will generate a consultation document in January 20201 aimed at providing the first ever internationally applicable financial reporting guidance for not-for-profit organizations. The document will be issued with a six-month comment period, according to September 10 discussions at the FASB’s Not-for-Profit Advisory Committee (NAC) meeting. The consultation document starts from the position that the new rules should utilize IFRS for SMEs as a primary platform on which to overlay the not-for-profit guidance, Jeffrey Mechanick, FASB’s assistant director-nonprofit entities, said during the NAC meeting. The document would also use International Public Sector Accounting Standards (IPSAS), full International Financial Reporting Standards (IFRS), and national-level guidance as sources where needed and appropriate. “The document will ask about the appropriateness of the completeness of the topics that we’ve tentatively identified as needing specific guidance and the possible approaches that could be taken for this guidance that we create for each of these topics,” Mechanick said. “The feedback that we receive on the consultation document would be really crucial to help us as we move forward to the next phase of the project where we’d be producing an exposure draft of an actual set of standards.”
Research Project on ‘Other Information’ Removed
When the PCAOB published an update to its research and standards-setting agendas, the board said one of the items it is removing is potential changes to the auditor’s responsibilities on “other information,” or information outside of the financial statements. Going forward, the board said it will include only the projects that it believes will have a public milestone in the next 12 to 18 months. This topic has been on the PCAOB’s agenda for several years, but it has not resulted in any changes in part because of resistance from auditors. In the meantime, investors want some sort of assurance on other information because public companies are increasingly providing useful information, especially non-GAAP metrics and sustainability reports. Investors want to make sure that they can rely on them. There is an incentive for companies to use misleading non-GAAP information, because those numbers might paint a rosier picture of their financial performance than their official audited GAAP numbers. While the PCAOB has removed it from the agenda for now, PCAOB member Jay Brown believes other information is an important topic for further discussion.
Search for New Technical Director Launched
GASB said it is seeking a replacement for David Bean, its current director of research and technical activities, who plans to retire next year after more than 30 years with the organization. Bean will vacate the post on March 31, 2021, GASB said. His departure will be a major change at the board, which relies heavily on his input. GASB develops generally accepted accounting principles (GAAP) for state and local governments and the director of research and technical activities is a key leadership role in helping with that effort. The position is critical for the overall management of projects on the GASB’s technical and research agenda, project-related communications, and interaction and engagement with state and local governmental entities, the board announcement states. The director leads GASB’s 25 staff members on all technical accounting projects and is the principal adviser to the GASB chair and board. The post also represents the GASB as a spokesperson on technical issues at a variety of speaking engagements, serves as a primary liaison with key groups, and develops the GASB budget. GASB is currently search for senior-level candidates to fill the role.