With the convergence era winding down, new leadership at the Financial Accounting Standards Board is setting a new course for long-term co-existence with the International Accounting Standards Board.

FASB Chairman Russ Golden, who assumed his post July 1 after the departure of Leslie Seidman, said it's time for the bilateral convergence movement between FASB and IASB to “evolve” to reflect the influence of national standard setters, especially those from major capital markets. “I envision a long-term global standard-setting environment in which the FASB, the IASB and other major capital market standard setters co-exist and cooperate,” he said, to issue converged standards but also meet the needs of their home markets. “FASB's first priority is to improve financial reporting for the benefit of investors and other users of financial information in U.S. capital markets.”

Golden gathered Thursday in New York with former FASB chairs, present and former board and staff members, and others close to the board to reflect on FASB's achievements to date and ponder a path forward. It's clear the board is moving on from the stated goal of converging standards with the IASB to redefine its role in advancing both international and U.S. accounting rules. “In addition to serving U.S. capital markets, the FASB's work also benefits others,” Golden said. “While working to improve U.S. GAAP, the FASB also seeks to promote and enhance the quality, comparability, and consistency of international financial reporting.”

In Golden's view, that means continuing to improve U.S. GAAP for the sake of companies who follow it while also providing input to IASB and other national standard setters to influence the development of their standards. FASB's newest member, Jim Kroeker, was the chief accountant at the Securities and Exchange Commission who led the study of a possible U.S. path to international standards. He said concern over FASB's role grew when the SEC staff study concluded the United States would likely sacrifice some influence over accounting standards if the SEC adopted IFRS in full. “Members of FASB have probably never felt so loved as when that paper went out,” he said.

A new direction for FASB means looking inward at the standard-setting process and determining how it can become more efficient and effective in producing new accounting rules. FASB member Larry Smith noted the board has spent more than a decade writing a standard for revenue recognition, longer than it took for meet the 1960s goal of putting a man on the moon. “I know revenue recognition is a complicated matter,” he said. “I just wonder whether the process we are following is effective. I'm definitely implying that I don't think it's as efficient as possible.” 

Also on FASB's agenda, said Golden, the board needs to do more to reduce the complexity and cost of applying the standards it establishes. FASB's work with its Private Company Council already is showing promise in producing that effect, he said. As the PCC considers ways to simplify GAAP for the benefit of non-public companies, FASB is finding some of its ideas can be applied more broadly, such as a recent decision by FASB to work on new guidance for development stage companies, whether public or private.

FASB also needs to take a fresh look at its Accounting Standards Codification, Golden said, as the board hears mixed reviews on its utility. The board re-organized historical GAAP pronouncements to arrange them by topic, give them equal authority, and put them into an online search tool. “Most agree and applaud the concept of the codification, but they also observe, as presently constituted, it is very cumbersome and not user friendly,” he said. FASB will conduct an analysis to determine what it can do to address the concerns, he said.