FASB News
Chief Accountants Caution Against Tinkering with Statement of Cash Flows
Finance chiefs at some of the nation’s largest companies told FASB that the technological systems are not in place to facilitate broad changes to the presentation of the statement of cash flows, an issue investors are pushing the board to tackle. “We’ve seen from some other standards, when we get ahead of system readiness, we have to then kind of backtrack to address it,” Alice Jolla, Microsoft Corp.’s chief accounting officer and corporate vice president, said. “I think that just looking at a robust cost benefit analysis if the FASB were to take this on would be critical because as preparers it would be very disruptive and costly to the organizations.” It would take more than a simple upgrade to meet the change, according to April 8 discussions by the Financial Accounting Standards Advisory Council (FASAC), FASB’s main advisory body. “Even the indirect method is a highly manual practice,” said Katherine Gill-Charest, ViacomCBS’s executive vice president, controller and chief accounting officer. “It’s not as simple as ‘upgrade your system, we configure your system, the technology is there.’ Look it’s not there, so when you’re talking about things like cost benefit and feasibility—it’s not even just a real cost—I wouldn’t even know how to do it today, never mind how to get it audited and costs associated with that and the potential risks of just getting it wrong and restated.”
Conundrum Over ESG Reporting Issues
FASB would need precise suggestions from the accounting profession on environmental, social, and governance (ESG) matters to consider taking up a project on the topic, because the issues are very broad and nuanced, the board’s April 8 advisory discussions signaled. Under its purview, FASB’s focus is accounting rules that are directly linked to financial statement line items, and many ESG matters are very broad, remarks by board members indicated. Investors, however, are clamoring for streamlined disclosure rules on the topic. “‘E’ is a broad category, ‘S’ is even bigger, because I don’t know what social issues we would be talking about,” FASB Vice Chair James Kroeker said. “Cage-free eggs might be a social issue, but all of consumer demand is social—we’re social creatures, so I don’t know how to distinguish between which social issues ought to be the distinguishing characteristics that drive demand.”
AICPA News
Extended Comment Deadline for Quality Management Standards Proposal
The AICPA’s Auditing Standards Board (ASB) is pushing back the comment deadline on a proposal that would revise its quality management (QM) standards. Comments are now due by August 31, according to AICPA spokesperson Jackie Hyland. Originally, comments were due by June 11 on the exposure draft (ED), “Proposed Statements on Quality Management Standards.” The ASB issued the proposal in February. The ASB’s exposure draft includes three interrelated proposed standards:
- Proposed Statement on Quality Management Standards (SQMS), A Firm’s System of Quality Control—SQMS No. 1
- Proposed SQMS Engagement Quality Reviews—SQMS No. 2
- Proposed Statement on Auditing Standards (SAS), Quality Management for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards (GAAS)—QM SAS
“The ASB has also posted Executive Summaries of each proposed standard, and a comment letter template for those who wish to use it,” Hyland added.
