Who says the FASB isn't listening?

• Author: Bohan, Michael P.
• Position: Financial Accounting Standards Board

Executives continually complain how the Financial Accounting Standards Board's statements in such areas as pensions and health care have hit them hard. The business press is filled with negative commentary on particular FASB decisions and on the board's role in general. But executives need to remember that the FASB didn't put their companies' pension and health-care plans in place; they did. The FASB simply established some accounting standards for these arrangements -- standards intended to put everyone on a level playing field.

In developing the accounting standards for pensions and other postemployment benefits, for instance, the FASB listened to its constituents and allowed for a lengthy transition period to soften the blow of adoption, and the board took a corridor approach to reduce the impact of long-term decisions on the income statement. It also revised several of its positions on income-tax accounting before it came to its final standard. To imply the FASB isn't listening isn't fair. It's also not fair to expect the FASB to accept every view submitted to it. If it did, it wouldn't fulfill its mission: to be an independent and even-handed standard-setter.

As sophisticated financial executives, we pride ourselves on being agents of change. We frequently use phrases like "breaking the mold," "shifting the paradigm," and "thinking outside of the box." Yet, when it comes to modifying accounting principles, especially when the FASB recommends it, the majority of financial executives who make their voices heard say "no" to change.

We must be willing to consider change, not act as immovable roadblocks. We must work more constructively with the FASB. That doesn't mean we should roll over and play dead, but it does mean we should be big enough to admit when change is required and be active agents for that change. We should recommend improvements, not try to derail the effective private-sector system we've put in place for establishing accounting standards.

While there are bits and pieces of some FASB pronouncements that I would have structured differently, on the whole the standards are well crafted and make sense -- not just conceptually, but from a pragmatic and common-sense view. The FASB has listened to its commentators more often than many executives are willing to acknowledge.

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