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FASB

Golden’s Departure as FASB Chair Ends Era

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

By Denise Lugo

FASB Chairman Russell Golden bowed out of his post last week after 16 years at the organization, ending an era that produced some of the most important accounting changes in modern times.

“I’ve loved every moment of it,” he told board members on June 10, 2020.

Golden vacates his seat at the end of the month due to term limits.

His departure comes at an unprecedented time for the FASB—amid a worldwide pandemic caused by COVID-19, the respiratory disease caused by a novel coronavirus. The board has had to quickly pivot its standard-setting plans to focus on emerging reporting matters related to the pandemic.

“Even in times of turmoil, the markets rely on the FASB to set standards that provide financial statement users with an accurate, transparent, and neutral view of an organization’s economic health,” Golden told Accounting & Compliance Alert in a June 12 email. “High-quality standards promote truth-telling in financial reporting. They help investors and lenders make better-informed decisions about how to invest their money—and what risks they are willing to accept.”

Golden began his term as the seventh chairman of the FASB on July 1, 2013, and was reappointed in 2016 to a second term that ends on June 30, 2020. He was appointed a FASB board member in 2010 after serving as the board’s technical director and chair of the Emerging Issues Task Force—posts that required navigating the 2007-2008 global financial crisis.

He initially joined the FASB in 2004, serving as senior technical advisor at a time the board was on a mission to improve financial reporting across the globe in tandem with the IASB. The IASB under then Chair Sir David Tweedie and the FASB under former Chair Robert Herz signed a memorandum of understanding (MOU) in 2006 to hold joint discussions to converge U.S. GAAP and IFRS standards or get the rules as closely aligned as possible. Herz was succeeded by Leslie Seidman, who was followed by Golden, under whose watch much of the work started under those other chairs was completed.

At the FASB’s June 10 meeting, Golden thanked his fellow board members—both past and present, FASB staff, the board’s advisory bodies, international standard-setting bodies, SEC commissioners and staff, stating “without your support we would not have been as successful as we were.”

The board’s collaborative efforts with its constituents are what stood out, he said.

“I loved the debate with stakeholders—investors, preparers, auditors, regulators, and occasionally the politicians about how we’re improving financial reporting, why we’re doing what we do,” Golden told his colleagues. “I would encourage you after I leave to continue promoting that debate and promoting that transparency.”

Among the standards that were completed under Golden’s watch were big ticket rules: revenue recognition, financial instruments including credit loss on loans and hedging, leases, and long-term insurance contracts.

Each standard posed its own set of issues for the board to complete and subsequently help companies in their implementation efforts.

Specifically, in 2014, the board issued Accounting Standards Update (ASU) 2014-09Revenue from Contracts with Customers (Topic 606), to replace hundreds of industry-specific accounting rules with a principles based five-step model for reporting revenues earned in a given period. The board deferred the standard in 2015, and then on June 3 this year, a second deferral was offered for privately owned companies that have not yet adopted the standard due to constraints posed by the pandemic.

In February 2016, the FASB issued ASU No. 2016-12Leases (Topic 842), to require companies to bring on balance sheets—for the first time—the full magnitude of their long-term lease obligations. The FASB deferred the rules in November 2019 for one year and did so a second time on June 3 this year for private companies and not-for-profits to address companies’ concerns that they did not have enough time to tackle the changes plus deal with coronavirus-related matters.

Later about mid-2016, the FASB also published ASU No. 2016-13Financial Instruments—Credit Losses (Topic 326), known as the “CECL” standard in response to the 2008 financial crisis. Some felt the crisis was exacerbated by the fact that the accounting rules restricted banks from being able to report credit losses they were expecting in a timely manner.

The current expected credit loss (CECL) standard aims to fix those concerns by requiring companies to forecast into the foreseeable future to predict losses over the life of a loan, and then immediately book those losses. The rules were delayed in November 2019 until 2023 for smaller public companies and private companies.

Two years later, in 2018, the FASB released ASU No. 2018-12Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, to provide simpler and more transparent ways to report technical aspects of life insurance, disability income, long-term care, and annuity payouts. The board on June 10 voted to delay the standard an added year, the second deferral in seven months.

Other topics the board advanced on during the Golden years include liabilities and equity, revisions to income tax rules, the conceptual framework for accounting standards, disclosures, private company modifications, including on simplifying goodwill accounting, not-for-profit financial statements, among a bevy of other topics.

 

This article originally appeared in the June 15, 2020 edition of Accounting & Compliance Alert, available on Checkpoint.

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