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Tuesday, February 28, 2012

Analysts Reiterate Need for Renewed Focus on Financial Statement Presentation Project

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 Members of the Financial Accounting Standards Board's Investors Technical Advisory Committee on Jan. 31 reiterated support for the viewpoint that the board should return its project on financial statement presentation (FSP) to its priority agenda.

The FSP project, a joint effort by the FASB and the International Accounting Standards Board, was placed on backburner in October 2010, so they could accelerate their joint efforts on developing guidance for revenue recognition, financial instruments, leases and insurance contracts. During the ITAC's meeting with the FASB, analysts were presented with a mock up of disclosures for a fictitious company under the revenue recognition proposal and asked to react to the disclosures.

As they went through some of the examples, the analysts explained that all of the pieces of disclosures that are brought about to help users would be solved with the FSP project and the balance sheet-to-balance sheet reconciliation that was part of that project. Summarizing ITAC's viewpoint one analyst said "all of these little pieces that are ending disclosures to each individual project would really be solved by that one project."

It will be interesting to see if this viewpoint is also rigorously broached during upcoming revenue outreach efforts by the FASB and the International Accounting Standards Board.

FASB and the IASB on Feb. 29 will host a webcast to discuss questions and concerns that have been raised during their outreach activities related to the proposed revenue standard, Revenue from Contracts with Customers (published November 2011).

The ITAC's comments have been echoed by other analysts and even some industry groups before (CFA Institute, November 2011 letter to IASB on IFRS Consultation Agenda), who have held to the viewpoint that the boards joint efforts on FSP, is an important accounting focus.

A more detailed outline of the ITAC's views is expected to be incorporated in a letter the analysts said they would submit to the board in the near future.

By Denise Lugo
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