FAF to Conduct Post-implementation Reviews on FASB and GASB Accounting Standards

Accounting standards governing financial reporting for business combinations, operating segments, and government deposit and investment disclosures will be the next subjects of post-implementation reviews (PIRs) conducted by the Financial Accounting Foundation (FAF), the oversight body of the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB), announced the FAF.

The FASB sets accounting standards for companies, both public and private, and not-for-profit organisations, while the GASB sets standards for state and local governments. The PIR process is intended to assist the FAF’s board of trustees with their ongoing efforts to evaluate the effectiveness of the standard-setting process for both the FASB and the GASB.

The standards selected for review are:

• FASB Statement No. 141R, Business Combinations (FAS 141R) – requires an acquiring organisation to recognise the assets acquired, the liabilities assumed, and any non-controlling interest in the acquired organisation at the acquisition date, measured at their fair values as of that date, with limited exceptions.
• FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information (FAS 131) – requires that public companies report financial and descriptive information about their reportable operating segments.
• GASB Statements No. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, and No. 40, Deposit and Investment Risk Disclosures – require note disclosures about deposits and investments, including related credit risks. In addition, Statement 3 also provides accounting guidance for repurchase and reverse repurchase agreements.

“The FASB and GASB standards selected for post-implementation review represented significant and important accounting changes when issued and continue to provide important information today to investors, stakeholders, and other users,” said FAF chairman John Brennan. “We look forward to assessing whether the intended financial reporting objectives underlying these standards are being met, while also obtaining stakeholder feedback on the application, usefulness, and effectiveness of these standards set by our boards.”

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