FASB Board Member Marc Siegel, sat down with Bloomberg Tax in Washington, DC at the AICPA’s conference on current SEC and PCAOB developments on December 5, 2017, for a Q&A. We discuss how companies can communicate with the FASB, and leverage FASB resources. Additionally, we get to hear about some of Mr. Siegel’s experiences, goals, and changes he has witnessed during his distinguished time on the FASB Board. The edited transcript is below.
As you approach your final six month as a FASB Board member, what are some of your objectives and goals?
Well Russ (Russell Golden) has put me in charge of working with the staff to help out with the leases implementation. So I've been working with the staff, along with preparers, auditors, and investors to help understand the issues that are arising in implementing the lease standard, seeing if there's any ways where we can address unintended costs or consequences without disrupting the useful information that's being provided by the standard.
We're also finishing up the disclosure framework project and wrapping up new standards on long duration insurance contracts.
What are some of the lessons that you learned with the revenue recognition standard in the last year that you're going to be able to apply to the leasing change in the next year.
We have really learned that we could do a pretty good job of working with companies, auditors, and investors to understand the issues that are coming up and try to deal with questions on a one off basis. What we try to do is when the question comes up, the staff gets to work and really does a good job of reaching out and getting in touch with all the people that are involved with digging into the roots of the problem.
What is the best way to contact you guys in terms of those one off type of questions?
There is a great site www.FASB.org/implementation. That is the implementation homepage and companies should go to that site, and then they could drill down and find things on leases, revenue recognition, current expected credit loss (CECL) and really dig in and see what we have been doing, and how to contact us for additional support.
With tax changes looming, in addition to the leasing, and revenue recognition changes, do you see that companies in most cases have the resources there? Is it realistic to expect their accounting departments to be able to handle this change and work with their auditors - with the time and money they have got to spend, are those issues that you're seeing?
We certainly hear and understand that the pace of change has been significant over the last number of years, and going forward over the next couple of years. We originally – five or six years ago – actually saw this coming and we issued a request for comment and tried to get feedback about how people wanted to deal with this change whether they wanted it all to happen in one year, or whether they wanted to have it staggered.
Of course the feedback came back 50/50. So what the board did is give extended effective dates. [In relation to revenue recognition] We actually ended up deferring the revenue recognition effective date for a year. [In relation to leasing] Last week we gave an option for companies to not provide comparative financial statements. So we are trying to address the concerns as they come up, especially if we find that there are costs that we had not really anticipated that people are finding and incurring and by doing so we would not be reducing the information that users get.
What has been the biggest technological change that you've seen from when you became a board member, [in 2008] to now?
I think the breadth of the way investors are consuming the information electronically now, compared to where they were in the past, we used to have to in a brute force kind of way, compare a company's financial statements from one period to the last period. Now there is all kinds of resources to be able to do that same kind of analysis electronically. Or redlining documents, it just comes to you electronically.
There are companies that are parsing the qualitative disclosures and doing word analysis, looking for sentiment the in the 10Ks and 10Qs, where they were not doing that in the past. The entire consumption of all the information is one of the biggest technological changes I have seen.
Can you clarify what it means to provide qualitative and quantitative disclosures?
Quantitative disclosures are best described by tables and numbers. Pure numbers and information that companies can provide that investors can dig into and analyze.
The qualitative disclosures are the narratives that provide the context for those numbers. [For example] management's discussion and analysis is usually a qualitative disclosure that describes what happened from one period to the last. And then there is a table - usually a quantitative table behind it - that actually gives the numbers behind it. So [providing quantitative and qualitative disclosures] it is really sort of a two, or three dimensional look at what's really been going on in the company.
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