Reexamination of Existing Standards
FASAB Contacts:
Monica Valentine, fasab@fasab.gov, 202-512-7350
Melissa Batchelor, batchelorm@fasab.gov, 202-512-5976
| Request for Comment | Due Date | Word Version of questions for Respondents | Comment Letters | Final Pronouncements |
|---|---|---|---|---|
| Reexamination of Existing Standards (PDF) | September 15, 2023 | Word Version of Questions for Respondents (Download) | Comment Letters | N/A – No pronouncement will result |
Project Objective:
The objective of the reexamination project is to reexamine FASAB’s existing standards to assess their current relevance and to identify opportunities to streamline authoritative guidance. The Board believes that the accounting standards should be periodically reexamined to assess their current applicability and to eliminate or revise unnecessary requirements. In this project, the Board is exploring opportunities to review and reexamine existing SFFASs and other pronouncements, as appropriate, and identify areas where clarification or amendments may be needed. The Board also agreed to research both the benefits of and concerns with FASAB’s current GAAP hierarchy. The reexamination project is expected to address issues related to (1) inconsistencies with current practice, (2) confusion or difficulties applying requirements, (3) the need for clarifications, and (4) the usefulness of disclosures and other required information.
History of Board Deliberations
February 22-23, 2023
At the February 2023 meeting, the Board provided feedback on the updated draft Invitation to Comment (ITC), Topics Related to the FASAB Reexamination Project. The Board had reviewed a first draft of the ITC at the December 2022 meeting. Staff had streamlined the updated draft significantly but noted there is the possibility to further streamline based on Board feedback and consensus on matters.
The generally accepted accounting principles (GAAP) hierarchy section was revised to provide proper context for asking respondents about whether and where administrative directives should be considered in the hierarchy and the clarity of the term “practices that are widely recognized and prevalent in the federal government” in level D. The Board generally agreed with the revised GAAP hierarchy section and related questions.
The Board agreed to add a clarifying sentence to paragraph 3 to explain that FASB and GASB had a GAAP hierarchy of several levels prior to their reexamination (that is, all standard setters had a four-level hierarchy at one time).
Although not discussed at the December meeting, staff wanted to confirm if the majority of the Board preferred to maintain the question regarding training in the GAAP hierarchy section. The Board agreed that question 1.3 regarding training on the GAAP hierarchy should be removed from the ITC.
At the December meeting, the Board had agreed to remove the discussion and questions on ranking reexamination approaches because it would be difficult for respondents to conceptualize (especially without knowing all the topics that have been identified). Staff updated the narrative to remove the discussion about the different approaches and the related question where respondents were asked to rank the approaches and made other streamlining revisions to the narrative and questions.
A member suggested combining questions 2.1a and 2.1b by allowing respondents no more than five “high priority” items. The Board agreed to streamline the questions in this manner.
A member suggested that the “medium/low priority” category be changed to “medium priority” as it may be important to distinguish between medium and low priority and that “no priority” be replaced with “low priority / no priority.” The Board agreed to change the categories.
A member suggested adding references for Interpretations and Technical Bulletins to the chart included with question 2.1 and Appendix A, Matrix of Individual SFFASs, to assist users with fully understanding the guidance related to the topics. The Board was agreed. With the changes, the Board generally agreed with the reexamination portion of the ITC.
The Board discussed time burden on respondents and that additional education and outreach may be required for the Codification of FASAB Standards and FASAB Handbook Improvements topic. After discussion, the Board generally agreed the section should be issued as a separate ITC at a later time.
The Board discussed the length of time the ITC should be available for comment. Staff recommended the ITC be available for four months. A member suggested that a key consideration would be when the ITC is released for comment because the Board should be cognizant of the end of the fiscal year. With the Board on track to release in April or May, a four-month comment period is reasonable. A member noted that if the Board does not meet targets, then the time period could be adjusted. The Board agreed to a comment period of three to four months depending on when the ITC is completed.
Staff will incorporate agreed upon changes into the ITC. The Board anticipates releasing the ITC in the spring.
Briefing materials – Topic B
December 13-14, 2022
At the December Board meeting, the Board provided feedback on the first draft of the Invitation to Comment (ITC), Topics and Approaches Related to the FASAB Reexamination Project. The Board had previously agreed that soliciting feedback through an ITC would be the first step to the reexamination project.
Staff had shared a draft with the Chief Financial Officer Council, Financial Statement Audit Network, certain independent public accounting representatives, sponsor Board member representatives, staff from other standard setters, and FASAB staff. This target audience gave feedback to staff that the draft ITC provided an understanding of the topics as well as how the three categories were related. The target audience also provided feedback that was very helpful and improved the document.
The Board had previously agreed that the generally accepted accounting principles (GAAP) hierarchy should be included in the ITC. Based on the draft, there were mixed views regarding the placement and the level of detail and specificity of questions regarding level D GAAP. After discussion, the majority of the Board members generally agreed that the GAAP hierarchy should be included first. The members agreed that any decisions regarding level D detail should wait until they consider additional information at the next Board meeting. The Board also agreed to delay any decisions regarding releasing a narrow ITC on the GAAP hierarchy in the spring.
The Board had previously agreed to solicit feedback on the various approaches to the reexamination project. Based on feedback from the target audience, staff determined that conceptualizing this might be difficult for respondents (especially without knowing all the topics that have been identified). Staff recommended not including the discussion and questions on ranking approaches. The majority of members generally agreed that question 2.5 and the majority of the detailed discussion regarding the approaches should be removed from the narrative. Questions that would assist with identifying particular topics and prioritization should stay.
The Board also discussed general clarifications regarding the ITC and the proposed questions. For example, the Board agreed that the ITC questions should be clarified to ensure that responses include the appropriate detail regarding the area of a particular Statement (paragraph reference) that is of concern. The majority of the Board agreed that Statements that have not been implemented should be excluded from the ITC but an explanation should be provided.
The Board did not have an opportunity to discuss the last portion of the ITC: Codification of FASAB Standards and FASAB Handbook Improvements. Some members were concerned regarding the length and burden to stakeholders. The Board discussed the possibility of issuing more than one ITC but made no decision at the meeting.
Briefing materials – Topic E
November 2022
Staff is in the final stages of drafting the Invitation to Comment (ITC). Next, the Draft ITC will be provided to targeted organizations, such as the CFO Council and Financial Statement Audit Network, to gain preliminary feedback on the ITC. The feedback will help ensure the ITC is clear, focused, and does not overlook key questions that may assist the Board with the project. Staff anticipates providing the Board the Draft ITC at the December 2022 meeting.
September 2022
Staff continues drafting the Invitation to Comment (ITC). Staff plans to gain preliminary feedback on the ITC by conducting outreach to targeted organizations, such as the CFO Council and Financial Statement Audit Network, to help ensure the ITC is clear, focused and does not overlook key questions that may assist the Board with the project. Staff is also focused on drafted a brief “Q & A” to provide the respondents with an understanding of ITCs and how the Board would use the information.
April 2022
Staff resumed work on the reexamination of existing standards project by beginning to draft the Invitation to Comment (ITC). Once drafted, staff will gain preliminary feedback on the ITC by conducting outreach to targeted organizations, such as the CFO Council and Financial Statement Audit Network, to ensure the ITC is clear and focused. Most importantly, it would help ensure the ITC does not overlook key questions that may assist stakeholders in providing the information the Board is requesting for the reexamination project. Staff believes conducting targeted outreach will be a valuable tool prior to returning the draft ITC to the Board.
December 2021
Due to competing demands with FASAB’s limited staff, work on the reexamination project will resume spring 2022. At the October 2021 meeting, the Board members generally agreed with the framework and topics of potential questions but provided staff feedback and comments to consider when drafting the Invitation to Comment (ITC.) Staff will draft the ITC based upon the feedback of the Board. As agreed to at the October meeting, staff will also seek input from the public on the draft ITC through outreach to specific organizations.
October 26, 2021
At the October meeting, staff presented a proposed plan to the Board on the initial steps for the reexamination of existing standards project. Staff was seeking the Board’s feedback on potential approaches to effectively manage a comprehensive reexamination project. The proposed steps included seeking input from the public, determining the general organization of an invitation to comment, and drafting a preliminary list of potential questions.
Seeking Input from the Public
The Board agreed that gaining widespread feedback on potential approaches would be integral to the project’s success. Staff plans to solicit input from the public by holding round tables, forming a task force, conducting outreach to various organizations, and seeking feedback in an ITC.
Staff identified the following high-level steps receive input from the public:
- Staff drafts ITC questions.
- Staff conducts outreach to organizations for feedback on draft ITC questions.
- Staff finalizes the ITC.
- The Board reviews the ITC.
- The Board releases the ITC for public comment.
- The Board analyzes the public’s response to the ITC.
The Board was in general agreement with staff’s recommended plan to seek input from the public.
Potential ITC Questions to Seek Feedback on the Reexamination Project
Staff provided the Board with a suggested framework/organization of the ITC along with a preliminary list of potential questions.
Staff presented eight potential ITC questions in the following three categories for the Board to consider.
- FASAB GAAP hierarchy
- Reexamination of FASAB standards
- Codification of FASAB standards and/or Handbook improvement
After discussing the reasoning for including the GAAP hierarchy and codification/Handbook topics in the ITC, the Board was in general agreement with the suggested framework. The three topics are interrelated and should provide the Board with a comprehensive approach to reexamine the existing standards.
The Board members generally agreed with the direction and topics of the questions. The Board provided staff general feedback and comments to consider when drafting the ITC, as well as additional questions for consideration.
Briefing Materials – Topic D
August 24-25, 2021
At the August Board meeting’s technical agenda setting session, the members approved moving the reexamination project from the Board’s research agenda to an active technical project.
June 22-23, 2021
At the June 2021 meeting, staff requested the Board’s feedback on potential approaches to advance the reexamination of existing standards research topic and consider the project during the August technical agenda deliberations.
Ms. Roberta Reese, GASB senior project manager, provided the Board with an overview of GASB’s process for selecting topics for reexamination.
A majority of members agreed with staff’s recommendation to further research both the benefits of and concerns with FASAB’s current GAAP hierarchy.
The members also agreed that the community’s input on the project’s approach will be important and agreed with staff’s recommendation to consider soliciting feedback through an invitation to comment as a first step to the reexamination project.
Briefing materials – Topic C
December 15-16, 2020
At the December 2020 meeting, the Board discussed and approved the technical plan for the reexamination of existing standards project. The research project’s objective is to reexamine FASAB’s existing standards to assess their current relevance and to identify opportunities to streamline Board guidance. The Board has previously stated that the accounting standards should be periodically reexamined to assess their current applicability and to eliminate or revise unnecessary requirements. The research topic will address issues related to (1) inconsistencies with current practice, (2) confusion or difficulties applying requirements, (3) need for clarifications, and (4) usefulness of disclosures and other required information. During the initial research phase, staff will perform an assessment of existing standards and develop options for Board consideration.
During the meeting, staff discussed that extensive project planning will need to be developed and approved by the Board before any project work begins. The project plan itself will take several months and will require the input of the full staff. It took thirty years to create the full portfolio of pronouncements and there has never been an effort to reexamine that portfolio. The reexamination project will better prepare FASAB for codification of the guidance, which is a goal of the Board’s. Several potential approaches and factors are being considered for the reexamination project, including looking at reexamination topically, reviewing terminology used throughout the guidance, and considering user needs, as well as assessing the cost/benefits of the guidance. Staff agreed to return to the Board in the coming months to provide a more detailed project plan and options for tackling the reexamination project.
Briefing materials – TAB D