Investors: Help Us Improve Financial Reporting

The Investor Perspective: During this Three-Part Series, FASB Members Hal Schroeder and Marc Siegel and FASB Senior Investor Liaison Chandy Smith Discuss the Board’s Outreach with Members of the Investment Community

Part 1: The Importance of the Investor Perspective
Part 2: Investor Views in the Standard-Setting Process
Part 3: Challenges and Opportunities

The FASB wants to hear from investors. Read on to find out how your input can help us improve financial reporting.
 

Recent Proposals

The FASB - Who We Are

The Financial Accounting Standards Board (FASB) is the independent, private sector organization that sets accounting standards for companies and not-for-profit organizations.

Why are FASB accounting standards important to investors?

Financial reporting is a communication between a company and those who provide resources to that company. Our goal is to set accounting standards that produce financial information useful in helping investors decide whether to provide resources to a company, and whether the management of that company has made good use of the resources it already has.

While we believe sound financial reporting leads to stronger capital markets by helping investors make informed decisions, it is important to note that the purpose of financial reporting is not to create the illusion of economic stability. The purpose of financial reporting is to provide an objective look at a company’s financial situation.

It is also important to point out the fact that while the FASB is always seeking to improve financial reporting, it carefully weighs the cost of making accounting changes versus the benefit of those changes to investors.

Why does the FASB want to hear from investors?

In order to improve U.S. GAAP, we need to hear directly from investors about the kind of information they need. This input will help the FASB set standards that result in better information for investors and other users of financial reports.

What types of investors does the FASB want to hear from?

We realize different investors may have different needs. Therefore, the FASB seeks to hear from ALL types of investors.

By investors, we mean anyone who has in the past provided, or may in the future provide, resources to a company or a not-for-profit organization.

They may include present or potential lenders, present or potential donors, and employees and others who provide resources in other ways.

This wide range of investors includes:
  • Portfolio Managers and Analysts from long-only asset managers and long/short hedge funds from both small and large firms
  • Sell-side analysts from large and small firms
  • Accounting analysts from both asset management firms and the sellside
  • Credit rating agency analysts and managers
  • Analysts that work with both equity and debt
  • Members of industry trade groups, such as the CFA Institute.
     

What kinds of things does the FASB want to know?

The FASB wants to know what investors think on a variety of issues. Specifically, we want to know whether:
  • Financial statements fail to provide information you need
  • Information is not being presented as clearly as it could be
  • Financial statements include information that is unnecessary
  • Information on the financial statement does not appropriately reflect economics
  • Changes proposed by the FASB will result in a more complete, accurate, or clear communication from a company.
In other words, input is needed at all times, and at all stages of FASB projects.

How can I find out what projects the FASB is working on?

The FASB website—www.fasb.org—lists each project that the FASB is working on. A complete list of projects is available on the website, and is always being updated with new information.

The FASB Outlook is a quarterly e-newsletter published by the FASB that provides high-level information about our projects in progress, as well as more forward-looking insights and pieces. Every quarterly issue features a column featuring Board and staff perspectives on issues that impact investors and other users of financial statements. If you are interested in receiving the FASB Outlook e-newsletter, click here to subscribe.

How can I provide my comments?

You can provide comments on specific projects electronically to director@fasb.org. As part of its open decision-making process, the FASB asks for public feedback on Discussion Papers, Exposure Drafts, and other proposals issued at various stages of a project. Your submission will become part of the public record.

If you would like to discuss any current FASB projects or proposed projects, or would like to be part of future FASB outreach on issues affecting investors, you can contact Chandy Smith and Jeff Brickman, FASB Investor Liaisons. They can be reached anytime via email, or you can reach them by calling (203) 847-0700.

Who are the FASB Investor Liaisons, and what do they do?

Chandy Smith and Jeff Brickman are the FASB Investor Liaisons. Both have extensive experience in the investment world, and are responsible for reaching out to investors to hear their views on various FASB activities. They want to hear from you, and are available to explain any aspects of FASB projects or proposed projects that may be unclear. Chandy and Jeff can be contacted anytime via email. You can also reach them by calling (203) 847-0700.

What does the FASB do with comments it receives from investors?

Once we find out what information is important to you, the FASB Investor Liaisons will take that information to the FASB, which will think about the most cost-effective way to provide it. Ultimately, decisions about accounting standards are made after weighing a number of factors, including investor usefulness and the cost of providing that information.

What other ways can investors participate in improving accounting standards used for financial reporting?

The FASB has a number of advisory groups consisting of investors, preparers, and auditors. These groups meet periodically to provide input to the FASB on various issues, including:
View a full list of FASB advisory groups.

If you are interested in serving on one of the advisory groups, please contact the FASB Investor Liaison.

The FAF (FASB’s parent organization) reviews FASB standards after they have been in effect for a few years to see if the financial reporting objectives underlying those standards are being met. This post-implementation review (PIR) process is designed to obtain feedback on the application, usefulness, and effectiveness of FASB standards.

The PIR process provides a unique opportunity for investors to be heard regarding the information they use in their day-to-day research and how that information might be improved. Investor input is critical to assessing whether FASB standards are effective in providing investors and other financial statement users with decision-useful information

If you are interested in participating in online surveys about specific standards, please register here.

If you’d like to learn more about the PIR process, click here.

Contact Us

To receive periodical news on issues that impact investors and other users of financial statements, click here to subscribe to the FASB Outlook, a quarterly e-newsletter published by the FASB that provides high-level information about our projects in progress, as well as more forward-looking insights and pieces.

If you would like to discuss any current FASB projects or proposed projects, or would like to be part of future FASB outreach on issues affecting investors, you can contact Chandy Smith and Jeff Brickman, FASB Investor Liaisons. They can be reached anytime via email, or you can reach them by calling (203) 847-0700.

Provide comments on specific projects electronically to director@fasb.org. Your submission will become part of the public record.