Research at the Standards BoardsAAA-Government & Nonprofit Midyear Meeting

Speakers: Dean Mead, Kim Petrone, and Cullen WalshModerator: Terry Patton

March 28, 2014

The views expressed in this presentation are those of the presenters. Official positions of the FASB and GASB on accounting matters are determined only after extensive due process and deliberation.

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Introduction to research at the FASB, GASB, and FAF

Research interactions with academia and other stakeholders

Questions and answers

Overview

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Research at the FASB

Pre-agenda research- What is the financial reporting issue?- Is the issue pervasive? - Can we identify the proper scope?- Are there one or more cost-effective solutions that would be

acceptable to the Board and stakeholders?

Active project research- Gather evidence about costs and benefits

Research Objectives

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Research Types

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• Academic studies• Other studies/surveys• Periodicals• SEC filings (10-Ks, comment letters)• XBRL

Archival/Empirical Analysis

• Individual or group meetings with stakeholders• Advisory Groups• Project specific resource groups• Surveys• Comment letters• Roundtables

Outreach

• Field work, which can take various formsExperiments

Characteristics of Research Useful to FASB

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Timely

Ability to connect research immediately and directly to the topic at hand…before standards setter needs to make a decision

Comprehensive

Comprehensive analysis of the entire issue all at once…rather than only focusing on a narrow aspect of a broader issue

Conclusive

Conclusions that are free from qualifications or multiple interpretations

Presentation

Emphasis on answering the question…rather than emphasis on the process used to arrive at the answer

Challenge = Understandability of research by non-academics

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Research at the GASB

Research serves the GASB’s overall mission of setting standards that support decision making and accountability

GASB Research Activities

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Evaluation of emerging

issues

Pre-agenda research

Additional research during

deliberations

How pervasive is the issue among governments?- Number and types of governments affected

- Magnitude of the transactions How have other standards setters dealt with the issue? - What has been the experience with those standards?

What are the major facets of the issue?- What are the potential solutions?

What information do users need? - How pervasive is that need?

- How would they use the information?

GASB Research Questions in General

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EmergingIssues

Pre-Agenda Research

During Deliberations

Archival

Literature review Surveys

Interviews

Group discussions

Case studies

GASB Research Methods

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Gil Crain Memorial Research Grant Program- One or more grants each year

- Research to be completed within approximately one year

- Potential topics are suggested in the request for proposals, but the GASB is open to considering other topics

GASB involvement in other research efforts

Leveraging the Work of the Academics

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Research at the FAF’s Post-Implementation Review

Help determine whether standard accomplish stated purpose- Did the standard resolve the issues underlying its need?

- Is decision-useful information being reported to and used by users of financial statements?

- Is the standard operational?

- Did any significant unexpected changes to reporting or operating practices result?

- Did any significant unanticipated consequences result?

PIR Research Objectives

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Review project archives (pre and post-issuance)

Interview stakeholders, Board members, project staff

Survey stakeholders

Review academic literature

Other- Financial statements- Technical inquiries - Firm guides- Analyst reports- SEC comment letters, restatements

PIR Research Procedures

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Resolve underlying need? - FAS 131: Increase in reported segments

Providing decision useful information? - FAS 109: Income tax information is value relevant

- FAS 131: Improved investors’ ability to value companies with significant foreign operations

- FAS 141R: market incorporates fair value of contingent consideration

Unanticipated consequences? - FIN 48: Change in company tax strategies

Findings from Academic Literature Reviews

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Academic consultant - Provides expertise on topic

- Provides an independent and objective perspective

- Helps develop unbiased survey questions

- Summarizes academic research and relationship to PIR objectives

- Assists in data analysis

Participation in PIR surveys

Register to participate on FAF website

Role of Academics in PIR Process

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Research Interactions with Academia and Other Stakeholders

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Questions from the Moderator

Open Q&A

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