FAF Issues Inaugural Post-Implementation Review Report
Over a year ago, the FAF adopted a new program that would review major standards that have been outstanding for a period of time to assess whether the standard has achieved its financial reporting objectives. This post-implementation review process was meant to improve the standard-setting process and facilitate more effective FAF oversight of the FASB and GASB.
FIN 48 was the initial standard reviewed by the FAF and today, after receiving input from various constituents (including academics), the FAF released its report. The 12-page report concludes that the standard generally achieves its objective of increasing relevance and comparability in reporting information about income tax uncertainties. However, it also notes that some stakeholders think it could be improved.
Look for an upcoming FASRI Roundtable that will discuss the post-implementation review process and how academics can get more involved. Providing ex-ante research to standard-setters has been a challenge for academics (although I think we’ve gotten better at doing this), but we are uniquely suited to provide ex-post research that can inform how standards have affected information environments for financial statement users.