Global Standards for the world economy

Sunday 28 May 2017

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 Description of FSP outreach activities continued

The following summarizes the activities the staff will engage in as part of the extended outreach on financial statement presentation.

  1. General outreach. We will meet with a variety of constituents to discuss the draft proposals.
    1. The specific objective of each meeting will vary depending on the entity, and our objectives at each meeting will be to:
      1. Ensure the participants have a clear understanding of the draft proposals, particularly the modifications that have been made to the presentation model proposed in the discussion paper
      2. Seek views from constituents and ensure that we fully understand their concerns with the draft proposals, particularly cost-related issues.
    2. In addition, at some meetings we plan to discuss in more detail specific aspects of the draft proposals, particularly those that differ from the discussion paper (for example, the statement of cash flows, application of the cohesiveness principle, disaggregation of by-nature information by segment [U.S. GAAP only], and the analyses of changes in asset and liability line items).
    3. We will also discuss the benefits and costs related to the draft proposals at each meeting (if participants are prepared to discuss those issues) as well as any alternative ideas participants may have to make the presentation model more cost beneficial.
    4. We will join EFRAG in their meetings with various European constituents (including national standard-setters, investor representatives, and preparers) to gather views on the draft proposals.
  2. Investor outreach. We will ask users of financial statements (from a variety of countries) to evaluate how the proposed changes to the organisation of and information presented in financial statements would benefit their analysis and resource allocation decisions.
    1. We will discuss with users the shortcomings with financial statements today and identify specific examples of when financial statement presentation may have made a difference in resource allocation decisions.
    2. We will post a PowerPoint presentation (with voice over�a Webinar) on each board�s website and users will be asked to complete a questionnaire after reviewing the Webinar.
    3. In addition to or instead of the Webinar/questionnaire, we will explain the proposals to individual users over the phone and hold a �structured� interview (similar to the questionnaire).
    4. We plan to meet with various analysts/investor groups to discuss the staff draft and to participate in or hold a Webcast to discuss the proposals in the staff draft.
    5. We will discuss the implications of the proposals on financial services entities� financial statements with users of those financial statements (in conjunction with our field testing efforts; see 4a below)
  3. Field visits. We will ask preparers of financial statements to evaluate the effort and cost involved in adopting the draft proposals in their unique circumstances.
    1. We will hold one-on-one meetings (field visits) with individual companies that have been following the FSP project and are familiar with the draft proposals. The purpose of those meetings will be to better understand how the entity would implement the draft proposals and the impact on their systems and processes, and the related costs. Our goal is to meet with companies from diverse industries, some that prepare their financial statements in accordance with U.S. GAAP and some that prepare their financial statements in accordance with IFRSs. Most field visit companies will be large multinational entities.
    2. We will discuss systems/cost issues that arise during the field visits with a variety of financial reporting system vendors.
  4. Field testing. We will ask preparers of financial statements to recast two years of financial statements using the draft proposals. This effort will be similar to and a continuation of the field test we performed with 30 companies on the proposals in the October 2008 discussion paper, Preliminary Views on Financial Statement Presentation (DP field test).
    1. Field test with financial services entities. Because insurance companies were the only financial services entities that participated in the DP field test, we are looking for banks, building societies, and credit unions to participate in a field test of the draft proposals. If you are bank, building society, or credit union interested in participating in this field test, click here to send us your information. If you have any questions, contact Regenia Cafini, FASB Project manager, at
    2. Field test with nonpublic entities. Some nonpublic U.S. entities are recasting their financial statements, answering a questionnaire, and providing feedback regarding operationality of the proposed model. We plan to have a group of credit analysts perform credit risk analysis on the non-recast and recast statements of the nonpublic companies and compare the results.
    3. Follow up with DP field test companies. The entities that participated in the DP field test have been asked to implement the draft proposals that differ from the October 2008 discussion paper (primarily the analyses of changes note disclosure and the by-nature segment information [U.S. GAAP only]). Those companies will complete a questionnaire that will supplement the questionnaire they completed as part of the DP field test. The questions will focus on differences between the proposals in the staff draft and the discussion paper.
  5. Cash flow information. Many constituents have expressed concern with the draft proposals related to the statement of cash flows. Thus, we are engaging in a number of activities focused on those proposals, including the following:
    1. We will discuss the costs associated with preparing a statement of cash flows as proposed in the staff draft during our field visits and other FSP outreach activities.
    2. We plan to consider how operating cash flow information is used by analysts that are familiar with a statement of cash flows that presents operating cash flow information using the direct method (e.g. analysts in Australia, New Zealand).
    3. The FASB�s Financial Accounting Standards Research Initiative (FASRI) will further review the academic studies related to the statement of cash flows.