FASB Releases FAS 162, FAS 163, And Conceptual Framework Docs

There’s been a flurry of activity lately at FASB in issuing two new standards in the past few weeks, plus the release of a couple of proposals for public comment on the Conceptual Framework Project. Here’s a rundown:
Final Standards
FAS 162, The Hierarchy of Generally Accepted Accounting Principles, (aka the GAAP Hierarchy). Published May 9, 2008. NOTE: The effective date is tied to finalization of related amendments to PCAOB auditing standards which were approved earlier this year by the PCAOB board and await SEC approval. See FEI summary
FAS 163, Accounting for Financial Guarantee Insurance Contracts. Published May 23, 2008. See FASB press release.
Proposals Released For Public CommentTwo documents were issued by FASB-IASB yesterday as part of its project to converge and improve the conceptual framework:
Exposure Draft: Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information. Joint document published by FASB and IASB on May 29, 2008. Comments due September 29.
Preliminary Views: Conceptual Framework for Financial Reporting: The Reporting Entity.Joint document published by FASB and IASB on May 29, 2008. Comments due September 29.
Although ‘conceptual framework’ may sound like lofty ivory tower stuff, don’t underestimate its impact – it is the bedrock that underlies financial reporting since it is meant to be the basis on which accounting standards are developed.

Some of the more controversial changes in the Exposure Draft (ED) containing the Qualitative Characteristics of financial reporting relate to what some view as the diminished role of ‘reliability’ vs. ‘relevance’.

Separately, issues raised in the Preliminary Views document on the Reporting Entity (note: a preliminary views document is something that provides the board’s early views and solicits comment before issuance of an Exposure Draft of a proposed concepts statement or standard) relate to, among other things, decisions on aggregation or disaggregation, as well as the role of legal status of entities in deciding what entities to include or not include in the ‘reporting entity.’

Further details on the Conceptual Framework proposals listed above are in FASB-IASB’s joint press release.

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