FASB News
Foundation Trustees to Propose Draft of Strategic Plan This Year
The Financial Accounting Foundation (FAF) will soon issue a draft of its three-to-five-year strategic plan for public comment, announced Chair Kathleen Casey. The draft will be issued with a 60-day comment period, Casey announced at the May 18 quarterly trustee meeting. It will include six strategic goals identified by the trustees, she said. A final plan will be published before year-end. The proposal comes as the FAF is celebrating its 50th anniversary, and will be a year later than expected. Casey did not state what the strategic plan will propose, but in September 2020 the FAF sent a survey out to the public that included questions on whether it should take a similar step as its international counterpart, the IFRS Foundation, and create a new board separate from the FASB and the GASB to develop environmental, social, and governance (ESG) standards.
Small Public Companies Ask FASB to Fix Accounting Rules for Research and Development Costs
FASB’s efforts to tackle the accounting for intangibles could open up a huge can of worms if done too broadly, and therefore the board should steer its efforts toward areas that lack consistency, board advisers said. Currently, there is a lack of consistency in reporting costs for internally generated intangibles, including research and development (R&D), which are required to be expensed, whereas the same assets, if acquired, must be capitalized. Investors find that odd, according to Small Business Advisory Committee (SBAC) discussions on May 12. “R&D is where we see a large disparity, especially for life science companies,” Dominick Kerr, partner, Global Accounting Standards & Professional Practice at Connor Group, said. “It always is a bit odd if we see you’ve grown that yourself it’s expensed as incurred but if you buy that from somebody else who’s grown it themselves, now you have an asset on the books,” he said. “And that is a challenge from a comparability standpoint.”
AICPA News
ASB Votes to Issue Final Quality Management Standards, Seeks Comment on Group Audits
The AICPA’s Auditing Standards Board (ASB) voted to issue final quality management standards during a May 11/12 meeting. The standards “introduce a risk-based approach to a firm’s system of quality management, formerly referred to as quality control, that allows firms to tailor their approach to quality management based on the nature and circumstances of their firm,” according to Ahava Goldman, associate director for audit and attest standards with the Association of International Certified Professional Accountants.
The following are the final standards:
- Statement on Quality Management Standards (SQMS) 1, A Firm’s System of Quality Control;
- SQMS 2, Engagement Quality Reviews; and
- Statement on Auditing Standards (SAS) 146, Quality Management for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards.
This follows a proposal issued by the board in February 2021.
