The FASB Technical Agenda: Current Projects and Process

The Financial Accounting Standards Board (FASB) Technical Agenda is the work plan outlining projects to enhance U.S. Generally Accepted Accounting Principles (GAAP). As a forward-looking tool, it provides a roadmap for potential changes to accounting standards, signaling to investors, preparers, and auditors which areas are under review. By monitoring the projects on this agenda, market participants can prepare for new standards, understand the rationale behind them, and plan for their implementation. This transparency is part of the FASB’s mission to improve the quality of financial reporting in the United States.

The Agenda Setting Process

The process of adding a new project to the FASB Technical Agenda is a structured undertaking to ensure the board focuses its resources on the most pressing issues in financial reporting. Ideas for new projects originate from a wide array of sources, with stakeholder outreach being a primary channel. Feedback from investors, financial analysts, companies, auditors, and academics often highlights areas where existing standards are unclear or costly to apply.

Another source for new agenda items is the Post-Implementation Review (PIR) process. After a major new accounting standard has been in effect, the FASB undertakes a PIR to assess whether the standard is achieving its objectives and to evaluate any unexpected costs or complexities. Findings from these reviews can lead to a new project to amend or clarify the original standard.

Advisory groups also play a formal role in recommending new projects. The Financial Accounting Standards Advisory Council (FASAC) consults with the FASB on strategic issues, priorities, and potential new agenda items. Other bodies, like the Private Company Council (PCC) and the Emerging Issues Task Force (EITF), bring specific perspectives and problems to the board’s attention.

Before a topic is formally added to the technical agenda, the FASB board members evaluate it against several criteria:

• The pervasiveness of the issue, assessing how many companies or industries are affected.
• Whether a new standard would represent a significant improvement to financial reporting by providing better information.
• The practical feasibility of developing a workable solution.
• The resources required to see the project through to completion.

Key Projects and Recently Completed Standards

The FASB’s agenda includes both active projects and recently finalized standards that will soon impact financial reporting.

One recently completed project involves the accounting for crypto assets. Previously under GAAP, many digital assets were accounted for as indefinite-lived intangible assets. This meant they were recorded at cost and only adjusted downward for impairment, never upward if their value increased, which investors argued failed to provide relevant information.

In response, the FASB issued a new standard that requires entities to measure certain crypto assets at fair value, with changes recognized in net income each reporting period. This provides more timely information about the value of these assets. The standard also mandates enhanced disclosures about the types of crypto assets held and any restrictions. It is effective for fiscal years beginning after December 15, 2024, though early adoption is permitted.

Another finalized standard improves disclosures for income taxes. This initiative was a response to feedback from investors who found existing disclosures insufficient for understanding a company’s tax position and risks. The new standard enhances these disclosures, requiring a more detailed reconciliation of a company’s effective tax rate and disaggregated information on income taxes paid by jurisdiction. For public companies, the new rules are effective for annual periods beginning after December 15, 2024.

The board is also actively working on a project concerning the accounting for government grants. Currently, there is no specific, comprehensive guidance within U.S. GAAP for how for-profit entities should account for government assistance. This has led to diversity in practice, making it difficult for investors to compare the financial statements of companies that receive government grants. The project aims to establish clear rules for the recognition, measurement, and presentation of government grants received by business entities, as well as disclosure requirements about the nature and impact of the grants.

The Standard Setting Lifecycle

Once a project is formally added to the technical agenda, it enters a multi-phase standard-setting lifecycle. The process begins with initial deliberations by the FASB board and research by the FASB staff. During this phase, the board and its staff explore the nature of the accounting problem, analyze potential solutions, and conduct outreach with stakeholders to understand different perspectives.

Following these initial deliberations, the board issues a formal proposal, most commonly in the form of an Exposure Draft (ED). An ED is a public document that details the board’s tentative conclusions, explains the reasoning behind the proposed changes, and includes the specific wording of the proposed amendments. The release of an ED marks the beginning of a formal public comment period.

The public comment period typically lasts from 30 to 90 days, or longer for more significant proposals, giving interested parties time to analyze the ED and formulate a response. The board encourages detailed feedback, particularly comments that provide a clear rationale and real-world examples of a proposal’s impact.

After the comment period closes, the board enters the redeliberation phase. FASB staff analyzes all the comment letters received and summarizes the feedback for the board members. The board then publicly redeliberates the proposal, taking into account the stakeholder input, and may decide to affirm, modify, or change its initial proposals before issuing a final standard as an Accounting Standards Update (ASU) with a majority vote.

How to Participate in the Process

Engaging with the FASB during its standard-setting process is a direct way to influence the future of financial reporting. The primary method for participation is by submitting a formal comment letter in response to a proposed standard. All documents open for public comment, including Exposure Drafts and Invitations to Comment, are available on the FASB website, which lists current proposals and their comment deadlines.

To submit feedback, stakeholders use an electronic feedback form on the FASB’s website, which is the preferred method. The form guides users to provide comments on specific questions posed by the board, ensuring the feedback is targeted and easy for the staff to analyze. The system allows for both direct text entry and the attachment of a formal letter in PDF format.

When crafting a comment letter, the most influential feedback is well-reasoned and supported by specific examples. Effective letters explain the rationale behind the position, rather than simply stating agreement or disagreement. Providing real-world data or illustrating how a proposed rule would impact financial statements can be persuasive, as this input helps the board understand the practical consequences of its decisions.