Greetings from the world of professional advocacy! The Financial Reporting Committee (FRC) of IMA® (Institute of Management Accountants) continually works to address financial reporting issues that impact the management accounting profession. With members from the Big 4 accounting firms and other prominent preparer companies and users, the FRC is able to provide the perspective of preparers and users of financial statements and auditors.

On February 28-March 1, 2018, FRC member Josh Paul hosted a Committee meeting at Google’s facilities in Mountain View, Calif. Also attending the meeting on February 28 was Marsha Hunt, a member of the Financial Accounting Standards Board (FASB). Hunt, who began her tenure at the FASB on July 1, 2017, shared her perspectives as a new Board member on the direction of the FASB’s agenda, implementation issues for new standards developed under the convergence project with the International Accounting Standards Board (IASB), early observations regarding the new hedge accounting standard, and the impact that the Tax Cuts and Jobs Act of 2017 has had on public and private companies.


Hunt previously worked at Cummins Inc. for 14 years during a time when the financial reporting environment greatly evolved, giving her valuable insight as a preparer of financial statements. She realized the importance of preparers participating in operational meetings where crucial issues that should be considered for disclosure in the Management Discussion & Analysis (MD&A) section of financial statements are discussed rather than focusing only on accounting and financial issues. Hunt intends to reach out to all constituents (e.g., preparers, users, and auditors) to obtain input to form her views on proposed guidance.

Hunt also shared her observations of a recent meeting with the FASB’s Emerging Issues Task Force (EITF). She said it was interesting that references to the FASB’s codification were driving discussions more than references to accounting transactions. FRC members expressed appreciation of the Big 4 accounting firms’ interpretation of guidance. Josh Paul, FRC member, thinks that it’s more practical for preparers to follow industry trends and input from their accounting staff regarding implementation of standards.


Hunt asked FRC members for input and feedback about their experiences with implementing three of the new FASB standards: Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers; ASC 842, Leases; and ASC 815, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.

Revenue Recognition. FRC members discussed the experiences and challenges their companies had implementing the new ASC 606. Most preparers said that the implementation process didn’t result in significant changes in systems. Accounting and finance teams at some companies gained more of an understanding of operations and business transactions, which resulted in simplification for some business lines. Hunt was pleased to hear that the implementation process strengthened dialogue about revenue transactions among various divisions at companies from an operational standpoint.

The general drawback noted among preparers was the significant time spent on documenting control processes. Yet time spent on control processes should help companies prepare for implementation of other new standards.

Aleks Zabreyko, FRC member, suggested that adoption of the revenue recognition standard should have been structured by company size since adoption for smaller entities with limited resources has been overwhelming. Zabreyko also suggested that a summary of the available guidance could be developed to help companies. Currently, the guidance is contained in 1,000 pages of documentation prepared by the Transition Resource Group (TRG) established by the FASB and IASB for the revenue recognition standard.

Leases and Financial Instruments. At the time of the FRC meeting, the FASB was focusing on targeted improvements for ASC 842. Hunt noted that the FASB’s recommendation for transition was well received by constituents. She also indicated that the FASB anticipated finalizing resolutions for targeted improvements sometime this year. FRC members noted implementation challenges related to third-party software systems and data migration.

Hunt indicated that the FASB will benefit from feedback on guidance that would simplify implementation of transactions combining nonlease vs. lease components. Bret Dooley, FRC member, shared his positive experience with FASB staff addressing implementation issues for the financial instruments (impairment) standard.

Hedging Standard. In regard to ASC 815, Hunt said that FASB staff is regularly challenged to ensure that the language in the new standard for hedge accounting simplifies the treatment of hedging transactions. Constituents have requested more guidance on the identification of contractually specific components of nonfinancial transactions.


FRC members told Hunt that they were pleased with the efforts of the FASB, the U.S. Securities & Exchange Commission (SEC), and the Big 4 accounting firms in dealing with the accounting implications of the tax reform act on a real-time basis. Mike Tovey, FRC member, noted he would like to see similar transparency with the FASB’s interpretation of new standards.


An added benefit of having FRC members host the meetings at their company location is the opportunity to engage with those at the company and even tour the facilities. At the meeting in Mountain View, Calif., FRC members were given a tour of Alphabet’s (parent company of Google) facilities. They also met with Ger Dwyer, CFO of Waymo, an Alphabet subsidiary, and discussed Waymo’s progress on its self-driving technology. One of its most recent cars, an FCA Pacifica, was available for viewing.


In addition to in-person meetings with individuals from standard setters, regulatory agencies, and other groups, the FRC continues to submit comment letters on proposed standards and raise relevant issues.

For instance, the FRC submitted a comment letter to the FASB in April 2018 to respond to an exposure draft on the EITF’s proposal on cloud computing costs for service contracts, EITF Issue No. 17-A: Customer’s Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement That Is Considered a Service Contract. The proposal is based on the FASB’s original guidance on cloud computing costs that include an internal-use software license.

FRC members who serve on the EITF had recommended that the FRC submit the comment letter to provide feedback on transition, disclosures, unit of account, and impairment testing. The EITF was also seeking feedback to determine if the proposal model should apply to other executory contracts in addition to hosting arrangements. You can find the FRC’s comment letters at

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