Greetings from the world of professional advocacy! The Financial Reporting Committee (FRC) of IMA® (Institute of Management Accountants) continues to serve as an advocate for IMA members and the profession overall by monitoring financial reporting issues that impact the management accounting profession. On October 13, 2017, the FRC met with members and staff of the Financial Accounting Standards Board (FASB) to discuss the direction of its agenda, implementation challenges for new standards developed under the convergence project with the International Accounting Standards Board (IASB), the disclosure framework project, and other issues that may impact public and private companies.


FASB Chair Russ Golden discussed the Board’s agenda based on comments received from constituents on its 2016 agenda consultation as well as decisions made during a Board meeting on September 20, 2017. The Board realizes that constituents will spend most of their time in the next few years implementing the new standards for revenue recognition, leases, and financial instruments impairment, which means now isn’t the time to introduce new projects. So the Board will instead focus on existing projects aimed at simplifying liabilities vs. equity and making improvements to segment disclosure and performance reporting.

The objective of the liabilities and equity project is to reduce complexity and promote simplification since restatements of financial statements have occurred under the current framework. Golden noted that one phase of the FASB’s conceptual framework project focuses on elements, including the definition of a liability. Potentially, the project will look at the definition of equity, which could result in a change in the characteristics of liabilities and equity. FASB Vice Chair Jim Kroeker mentioned that another objective for the project is to condense various models for bifurcation into one model.

The project on segment disclosure improvements aims to make aggregation criteria more comprehensive and to add new items for segment disclosures. And the focus of the performance reporting project is to determine criteria for more disaggregation of performance information, including the nature and function of expenses.

FRC Chair Nancy Schroeder inquired about the status of the FASB’s work on guidance for the statement of cash flows. Golden referred to work done by the FASB’s Emerging Issues Task Force (EITF) that resulted in the issuance of guidance on classifications within the statement of cash flows. The FASB staff is currently conducting research to determine if any additional issues should be considered. The Board will then decide if additional issues regarding cash flow classification will be placed on the Board’s or EITF’s agendas.

The FASB also plans to complete its insurance project and simplification of accounting for nonemployee stock-based compensation. The FASB’s staff consults with the Private Company Council (PCC) in its advisory role to ensure that private company concerns are addressed during the due process with each agenda topic.


The FASB and FRC also discussed the status of new and updated standards at or near implementation.

Revenue Recognition. Implementation for the revenue recognition standard begins January 1, 2018. One topic of discussion was AICPA Industry group guidance, and it was noted that guidance for some industries is still in process. Golden is hopeful that constituents will be able to implement the standard based on guidance from the Big 4 accounting firms and finalized AICPA Industry Guides. Lara Long, FRC member, shared her experiences attending meetings with industry colleagues to compare notes since there are currently no AICPA Industry Guides for the heavy equipment commercial vehicle manufacturing industry.

John Stewart, FRC member, recommended that the FASB add an item to its agenda to amend the revenue recognition standard to include guidance for business combinations and purchase accounting related to performance obligations.

Leases. The FRC recently submitted a comment letter to the FASB in which it agrees with the transition proposal in the Board’s exposure draft for the practical expedient for land easements. Jeff Ellis, FRC member, took the lead in discussing implementation issues for the leases standard with the FASB staff. In regards to the proposed Accounting Standards Update (ASU) on technical corrections, he noted that the topics addressed were consistent with issues raised by the FRC on the new standard. Ellis suggested that the proposed ASU also address a difference between the revenue recognition and leases standards regarding how a lessor accounts for cash collections when the lessor is unable to conclude that collectability is probable on a sales-type lease. Under the revenue standard, a company could recognize cash collections as revenue if certain conditions are met, but that same treatment doesn’t apply to lessors who are similarly situated.

Disclosure Framework. In previous meetings with the FASB, FRC member Mitch Danaher has expressed the Committee’s overall concerns with the direction of the FASB’s disclosure framework project, recommending that the Board take a step back to determine if the project is addressing its original objectives. The FRC previously recommended that the FASB should determine if prescribing specific disclosures is the right model for achieving effective disclosure.

During the October meeting, Danaher suggested a different approach that could alleviate work for constituents regarding disclosures. He recommended that the Board focus on interim reporting. The FRC believes that the Board could make a lot of progress in reducing complexity by focusing on interim reporting and adopting the SEC’s integrated reporting model. Marc Siegel, FASB member, acknowledged Danaher’s suggestion but thought that addressing materiality first was necessary.


When there are accounting proposals that impact constituencies represented by different IMA committees, the groups are encouraged to work together. Ellis encouraged the FRC to collaborate with IMA’s Small Business Financial and Regulatory Affairs Committee (SBFRC) to address the FASB’s 2017 proposal on targeted improvements to related party guidance for variable interest entities.

Because they represent different constituents, the FRC and SBFRC have different views on the proposal. Before meeting with the FASB members, the two committees agreed that, during the meeting, SBFRC Chair Gerry Silberstein would express the SBFRC’s views and that Ellis would discuss the FRC’s views. They both noted that the FRC and SBFRC were in agreement that a size threshold for any private company alternative for related party guidance for variable interest entities was desirable.


The FRC also submits comment letters on proposed standards and brings relevant issues to the attention of these groups. You can find the comment letters at Please contact me for additional information about IMA’s Financial Reporting Committee.

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