How to Write and Submit an Effective FASB Comment Letter

The Financial Accounting Standards Board (FASB) is the organization responsible for establishing financial accounting and reporting standards for U.S. companies. These standards are codified in the FASB’s Accounting Standards Codification (ASC), which is the single source of authoritative U.S. Generally Accepted Accounting Principles (GAAP). A part of the FASB’s standard-setting process involves soliciting public feedback on proposed changes to these rules.

This feedback is formally collected through comment letters. When the FASB proposes a new standard or a significant amendment, it issues an Exposure Draft detailing the proposed changes and the board’s reasoning. The public, including corporations, auditors, investors, and industry groups, is invited to respond by submitting a comment letter. This process allows the FASB to consider the real-world implications and diverse perspectives of those affected by the new rules before they are finalized.

Key Components of an Effective Comment Letter

An effective comment letter begins with clear identification, stating the author’s name and role. This provides context for the board, helping them understand the perspective from which the comments are offered. A well-organized letter starts with a concise introduction summarizing the author’s overall position on the proposed changes.

Following the introduction, detailed comments should be structured to align with the specific questions the FASB poses within the Exposure Draft. Merely agreeing or disagreeing with a proposal is not enough. The most helpful letters include:

• A direct reference to the specific proposal being addressed by including the title and project number of the Exposure Draft.
• A substantive rationale for its positions, supported by logical analysis and a firm grasp of underlying accounting concepts, referencing the FASB’s Conceptual Framework where applicable.
• Specific, real-world examples that illustrate the practical consequences of a proposed standard, such as data on implementation costs or scenarios showing how a proposal could create misleading financial reporting.
• Workable alternatives or modifications if a respondent believes a proposed rule is flawed, explaining how the alternative could better achieve the FASB’s objectives.

Throughout the letter, maintaining a professional, respectful, and constructive tone is important. This helps ensure the arguments are received as credible and helpful contributions to the standard-setting process.

The Comment Letter Submission Process

The first step in submitting a comment letter is to locate the relevant proposal and its associated deadline on the FASB website. The website features a section for projects where stakeholders can find all active Exposure Drafts and other invitations to comment. Each document clearly states the public comment deadline, which is a firm cutoff that must be respected for the feedback to be considered in the formal review process.

Once the letter is finalized, it must be submitted through the FASB’s electronic submission system, which is the required method for transmitting feedback. The process involves navigating to the specific project page and clicking the “Submit Comment Letter” link. This opens a form where the submitter enters identifying information and uploads the comment letter file, usually as a PDF.

After the file is uploaded and the form is completed, the user will receive an on-screen confirmation that the letter has been received. An automated email confirmation is also sent to the email address provided, serving as a record that the feedback was successfully transmitted.

FASB’s Review and Consideration of Feedback

Upon submission, every comment letter becomes part of the public record for that project and is posted on the FASB website. The letters are accessible to the board, its staff, and any member of the public. This transparency allows all interested parties to see the feedback and arguments submitted by others.

The FASB staff analyzes and summarizes the feedback from all comment letters. They categorize comments based on the issues raised and prepare a summary for the board members. This analysis focuses on the substantive arguments, rationale, and evidence provided by respondents, not simply the number of letters for or against a proposal.

This summarized feedback is a primary input for the board’s public redeliberation meetings, which are open to the public via webcast. During these meetings, board members discuss the issues and concerns raised in the comment letters. The staff presents its analysis, and the board members debate the merits of the arguments as they reconsider the original proposals.

The feedback provided in comment letters can lead to significant changes in the final standard. If the letters present compelling arguments and evidence, the FASB may decide to modify specific provisions, clarify language, or add transition guidance to address operational concerns. If feedback reveals fundamental problems with the initial proposal, the board may issue a revised Exposure Draft for another round of public comment. The process culminates when the board issues a final standard, an Accounting Standards Update (ASU), which formally amends the Accounting Standards Codification.