FASB Opens Portal For Post-Implementation Reviews Of Standards

Written By: Michael Cohn

The Financial Accounting Standards Board has created a web portal to offer a view of its post-implementation review process.

The PIR process is an important quality control mechanism that’s built into FASB’s standard-setting process, starting after a standard has been issued. During the PIR process, FASB requests and considers feedback from different types of stakeholders and does its own research to see whether a standard has been meeting its objectives of providing financial statement users with relevant information in ways that justify the cost. Post-implementation reviews enable FASB to identify and deal with any areas for improvement stemming from either adoption or implementation of a standard.

“The PIR web portal helps stakeholders navigate this important part of the FASB’s standard-setting process, which ensures completed standards perform up to expectations,” said FASB chair Richard R. Jones in a statement Tuesday. “It’s an especially timely resource that coincides with our review of the effectiveness of recent major standards on credit losses, leases and revenue recognition.”

FASB’s parent organization, the Financial Accounting Foundation, announced plans in May to revive and overhaul the PIR process after it went several years without doing any reviews of its old standards (see story). Instead of the FAF doing the reviews, FASB and its sister organization, the Governmental Accounting Standards Board, will be leading the reviews, with oversight by the FAF. FASB has been rolling out a series of major standards in recent years and is now under Jones’ chairmanship after he took over from Russell Golden last month after the expiration of Golden’s term.

The new PIR web portal links visitors to current projects and provides an overview of the actions taken to date as well as the plan for future activities. The overview is expected to evolve as FASB learns more while it conducts the reviews on its own and completes its activities.

Depending on the outcome of the evaluation, FASB said it may decide to take action to address one or more of the following:

  • Areas of the standard that aren’t understandable;

  • Unintended consequences that weren’t foreseen during development of the standard; and/or,
  • Unexpected costs (one time or ongoing) based on the actual results observed as compared with the expectations documented in the board’s basis for conclusions.

As with all standard-setting activities, actions stemming from a PIR are subject to FASB’s typical due process.