In its comments to the Progress Report of the SEC Advisory Committee on Improvements to Financial Reporting (see BVWire™ #65-3), the Financial Accounting Standards Advisory Council (FASAC) focused primarily on the proposal to improve the standards-setting process.  Specifically, Developed Proposal 2.3 recommends the FASB to create a formal Agenda Advisory Group, from investors’ groups, auditors, preparers, and others, to actively manage U.S. standards-setting procedures.

“We disagree with [the proposal] as currently drafted, because it appears to create systemic redundancies,” says the official FASAC comment letter, before adding, with emphasis, “The proposal disregards existing councils and committees that currently advise the FASB on its agenda and its technical projects.”  These include the FASAC and other FASB-formed groups such as its Investors Technical Advisory Committee, Private Company Financial Reporting Committee, and others.  “If the proposal is adopted…it has the potential to create tremendous overlaps in responsibility and inefficiency in the agenda advisory arena because two separate groups—FASAC and the Agenda Advisory Group—essentially would be tasked with the same functions” (emphasis in original).

Instead, FASAC supports the formation of a new system-wide advisory group to: i) advise all constituents of the financial reporting system; ii) assist in emergency application and implementation issues with U.S. GAAP (not FASB projects); and iii) take a “triage-like” approach to assess which groups (FASB, PCAOB, SEC, audit firms, etc.) should address emergency issues.  To read all comment letters, including one from SEC former Acting Chief Accountant Scott Taub (in which he says that “preparers and auditors fear being second-guessed, and that fear is affecting their actions in unhealthy ways”) click here.