Rarely do students get a chance to meet face-to-face with such outstanding leaders in accounting and financial reporting industry as the Chairman of the PCAOB, Chief Accountant of the SEC, and Chairman of the FASB. The financial reporting conference which took place on May 1st, 2014 at Baruch College had the aforementioned professionals in attendance, and presented a one-of-a-kind opportunity for students to hear the latest updates about accounting practices coming directly from the standard setters in all fields and spectra of the profession. The conference was moderated by Baruch Professor Norman Strauss, and the main topics on the agenda included current developments at the SEC, revenue recognition, and issues related to the private sector. An open discussion about the financial reporting issues for preparers followed.
The conference opened up with the welcoming address from Professor Norman Strauss and continued with the opening remarks from the Chief Accountant of the SEC Paul Beswick and Chairman of the FASB Russell Golden, who provided an update “straight from the top.” Mr. Beswick spoke about audit risk, internal control and disclosures, and specifically emphasized the importance of audit committees’ responsibility for audit quality and accountability to outside shareholders. Mr. Beswick expressed the idea that audit committees should put focus on audit quality rather than the cost of the service provider when considering whether to hire or retain an auditor. Mr. Golden continued talking about the future of the FASB, and the FASB’s dual focus on reduction of complexity and promotion of simplification in accounting standards.
After the opening remarks, the conference featured several panel discussions. One of the major topics discussed was the new standard on revenue recognition which will come into effect on 01/01/2017 (01/01/2018 for private companies). After long deliberations, the FASB and IASB have achieved convergence in this area, and the new standard will replace all the FASB, AICPA, and EITF literature on revenue recognition in the Codification. Companies throughout all industries and in all countries will use the following five-step approach to recognize revenue from customer contracts:
1. Identify contract(s) with customer
2. Identify separate performance obligations in the contract(s)
3. Determine the transaction price
4. Allocate the transaction price to the performance obligation(s) in the contract
5. Recognize revenue when (or as) the entity satisfies the performance obligation(s)
The panel discussed how to recognize revenue according to the new standard, and went into details discussing each of the steps above. Interestingly enough, the new standard does not explicitly mention completing the earnings process and matching revenues and expenses. The new standard will also require more judgment and estimates than today. The FASB and IASB have set ambitious goals when working on this standard, such as removing any inconsistencies, being more robust, comparable, useful and simple, and now these objectives will be put to the test. If the practice proves that these goals have been accomplished, it will be a successful step to making the accounting standards more globally comparable.
There were many interesting speakers at the conference, however students who are taking the “Contemporary Topics in Accounting” class with Professor Strauss would have probably found the presentation by FASB Technical Director, Susan M. Cosper, the most exciting. Ms. Cosper covered a lot of issues that Professor Strauss’s students write their term papers on, such as current updates on leases, financial instruments, the disclosure framework, and others. This gave students a unique opportunity to not only hear the latest updates directly from the FASB, but also see an exemplary presentation of technical information and ask questions on current issues in the accounting world.
In general, students who were able to attend the conference believed that this experience not only provided them with an opportunity to receive a lot of useful information, but gave them a broader outlook on the process of accounting standard-setting. In addition, the conference also gave students a clearer idea of what it is like to work as an accountant in today’s workplace. in the accounting profession.