Qs and As about the special committee on financial reporting.

Author:Rosenfeld, Paul H.
Position::American Institute of Certified Public Accountants special committee
 
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These are answers to frequently asked questions about the American Institute of CPAs special committee on financial reporting and its work.

Q: Does the special committee's work invade the Financial Accounting Standards Board's turf?

A: No. The two groups' work is complementary.

Although the two organizations share a common goal--to improve financial reporting--there is little overlap in their work. The committee has no standard-setting authority and is not developing accounting guidance, while the FASB sets accounting standards. The committee is considering broad recommendations in the general area of external business reporting, while the FASB is focused on financial statement issues.

The committee's recommendations will support rather than undermine the FASB's mission to improve external financial reporting. Many of the committee's recommendations will be used by the FASB to shape its future agenda. The FASB long has sought input on possible future projects, and the committee's work will help it assess their relative importance.

For these reasons, the committee and the FASB have cooperated closely. A FASB member participates in all committee meetings. The FASB also has provided critical staff support in a major area of mutual interest--studying users' information needs.

Q: In studying users' information needs, did the committee consider all users, or did it narrow its focus to certain users? If so, which users were considered and why?

A: Users of external reports are a diverse group. They include investors, creditors, management and board members, employee groups, competitors, regulators, academics, auditors, the press, users concerned with various social causes and others. Each of these groups may use external reporting for different reasons.

The committee focused on improving external reporting to help users with investment and credit decisions for three reasons:

  1. The AICPA formed the committee primarily to address concerns about the relevance of external reporting in making investment and credit decisions.

  2. The traditional focus of external reporting has been to assist users in making investment and credit decisions, thereby helping make sure capital is allocated efficiently and effectively. The committee viewed that role as a critical function and saw no reason to change it.

  3. The committee decided to spend its limited time and resources on the role of external reporting in assisting investors and creditors rather than attempting to...

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