Financial Accounting Foundation Improves Post-Implementation Review Process for Accounting Standards
Norwalk, CT—May 13, 2020—The Board of Trustees of the Financial Accounting Foundation (FAF) today announced it has adopted improvements to the Post-Implementation Review (PIR) process for new accounting standards created by the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). The FAF is the organization that appoints and oversees both Boards.
Under the improved approach, leadership of future PIR projects will transition from the FAF staff (supported by the Boards) to the Boards themselves, with continued strong oversight by the FAF Board of Trustees. With this new approach, the PIR process will now be embedded in the Boards’ overall standard-setting process. As such, field data gathered as part of the FASB and GASB’s existing extensive post-issuance and post-implementation activities with stakeholders will be integrated directly into the PIR. The FASB and the GASB will report on the progress of PIR projects during their public meetings and will report regularly to the Standard-Setting Process Oversight Committee (SSPOC) of the FAF Board of Trustees. The final PIR report will be reviewed by the SSPOC and published on the FAF website.
This approach enhances the transparency and integrity of the existing PIR process, but eliminates duplicative research and field work that the current process imposes on the Boards and on stakeholders.
“Post-implementation reviews are a vital part of FAF oversight, but in the spirit of continuous improvement we should always ask ourselves if we can be more efficient without compromising integrity. We think this change meets those criteria,” said FAF Chair Kathleen L. Casey.
Casey noted that the FAF staff and standard-setting Boards spent more than a year re-examining the PIR process before proposing changes to the FAF Trustees. After careful review by the SSPOC and additional consultation with stakeholders represented on the Financial Accounting Standards Advisory Council and the Governmental Accounting Standards Advisory Council, the proposed process change was submitted to the full FAF Board of Trustees for approval today.
The FAF created PIRs a decade ago to determine whether important standards met their objective to improve financial reporting for investors and other users of financial statements. To date, there have been a total of fourteen completed PIRs covering FASB and GASB standards.
There are no active PIRs at this time, which made this a good opportunity to introduce a process change, Casey said. The improved process will be used on future PIRs.