The FASB at work. (Financial Accounting Standards Board)by Craig, James L.
The Board Meets
Board meetings typically begin at 9:30 A.M. Members sit in the same place at the table for each meeting. The director of research sits to the immediate left of the chairman. As agenda items are discussed, the start responsible, who sit across from the Board, recommend actions, respond to questions and accept the input of the Board.
After discussion of questions, the chairman seeks the views of Board. He usually starts with the member furthest to his left. It then becomes that member's task to state a summary of the issue and give his opinion. At the conclusion of that member's discussion, other members are asked to speak in turn. This process at times becomes a debate between staff and board members. It is a verbal process as each seeks to articulate his personal views and convinced other members.
Materials and memos that go to members for discussion at these meetings are not distributed or available to the public, but minutes of meetings are available, and a summary of the issues discussed is often distributed to observers at the meeting.
By Wednesday evening the materials relating to the next week's agenda are distributed to members. Preparation of the agenda is administered by the director of research and technical activities under supervision of the chairman.
Organization of the Board
The director of research and technical activities, with the help of two assistant directors, oversees a technical staff of approximately 40 full-time professionals including 10 fellows and interns who serve a defined one-or-two year term. Each project that the Board is working on is assigned to a project manager who oveersees preparation of materials for consideration by the Board. The director meets periodically with the staff to learn which projects are ready to be placed on the agenda.
David Mosso, assistant director, heads up major projects, and J. T. Ball, assistant director, heads up implementation and practice problems, commonly referred to as IPP. In this way the staff is organized to have resources available to deal with both urgent issues and the long-term development of major standards. Project managers, under Mosso's direction, typically work on the major projects--matters leading to SFASs--and IPP projects are usually staffed by practice and industry fellows. For example, the IPP staff supports EITF activities, and works closely with the SEC staff that follows the EITF.
A further example of the division is the assignment of areas under the financial instruments project. This project, dealing first with disclosures and then with measurement, is being handled by project managers under Mosso. A more urgent subset of this, on the accounting for marketable securities by financial institutions, is being handled under the guidance of Ball in IPP. Usually IPP projects do not involve a discussion memorandum and their first published product would be a statement exposure draft.
One project manager has been designated as liaison to make sure the Board has input from smaller CPA firms and private companies. He attends meetings of the Technical Issues Committee of PCPS.
The Process Begins
On Thursday and Friday, members begin digesting the materials for the next meeting. This would include reading comment letters relating to the agenda items. They also attend to other duties--speeches may have to be written, meetings with outsiders and others held, and administrative matters attended to. Typically on Monday and Tuesday, members will have "pre-board" sessions with the technical staff responsible for upcoming agenda items. Under the Board's policy, no more than three members may meet to discuss technical matters other than at properly called public meetings. Thefore, staff for a project will meet separately with no more than three members to discuss issues and answer questions.
A major portion of the director research and technical activities' time is spent in working with the staff as to which issues should be brought before the Board and how and when they should be presented. According to Lucas, the project managers have discretion in deciding how to proceed and in developing the issues, but always subject to the direction and interests of the Board.
The director research and technical activities also sets the technical plan for the Board--attempting to predict which project will reach what stage in which quarter of the year. The technical plan is reviewed, modified, approved at a Board meeting, and published each quarter.
Board meetings have many different agenda items, such as:
* Informing Board members. Sessions are sometimes devoted to a presentation of concepts in which the Board builds a sufficient level of understanding before it considers the accounting for a particular matter. For example, the Board recently held such educational meetings on the topic of reinsurance.
* Deciding which projects to undertake. Discussions on undertaking a project include the scope thereof and the results that can reasonably be expected.
* Developing and approving exposure drafts. The technical staff drafts the EDs in stages seeking Board approvale along the way. Ultimately a final ED will emerge.
* Considering comment letters. The Board considers all comments received and technical staff suggestions for changes that should be made.
* Changes to EDs leading to final statements. Final statements are subject to a written ballot. Often there are pre-ballot drafts to work out the kinks.
According to Lucas, the Board is heavily involved in every issue.
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