Emerging Issues Task Force

Contents

Emerging Issues Task Force is a technical body within the Financial Accounting Foundation structure that addresses timely accounting and reporting issues arising in practice for preparers, auditors, and users of financial information. It serves as an intermediate forum between the Financial Accounting Standards Board and practice communities such as Big Four firms including Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG, as well as corporations like General Electric, Microsoft, and ExxonMobil. The task force operates alongside other standard-setting actors including the Securities and Exchange Commission, the Public Company Accounting Oversight Board, and international bodies such as the International Financial Reporting Standards Foundation.

History and Formation

The task force was created in 1984 under the auspices of the Financial Accounting Foundation during a period shaped by events like the Savings and Loan crisis, the aftermath of the Reagan administration deregulatory era, and debates involving the American Institute of Certified Public Accountants. Early participants included representatives from firms such as Arthur Andersen and Coopers & Lybrand and corporations like General Motors and AT&T. Milestones in its development paralleled major accounting episodes including the Enron scandal, the establishment of the Public Company Accounting Oversight Board after the Sarbanes–Oxley Act of 2002, and the global response coordinated with the International Accounting Standards Board. Over time the task force adapted its procedures in response to guidance issued by the Financial Accounting Standards Board and pronouncements influenced by cases such as the WorldCom collapse and the Lehman Brothers failure.

The task force provides implementation guidance and timely responses to emerging topics that the Financial Accounting Standards Board cannot address immediately, working on matters that affect issuers registered with the Securities and Exchange Commission and entities audited under Public Company Accounting Oversight Board standards. Its remit spans interactions with counterparts like the International Financial Reporting Standards Foundation and regulators such as the Federal Reserve System when issues relate to financial instruments, fair value measurement, and disclosures raised by entities including JPMorgan Chase and Citigroup. The task force issues consensus documents to inform auditors at firms like Grant Thornton and users including Vanguard and BlackRock about application issues arising from standards such as those promulgated by the Financial Accounting Standards Board and interpreted in litigation before courts like the United States Court of Appeals for the Second Circuit.

Members are nominated from accounting firms, preparer organizations, and academic institutions; notable participants historically have included personnel from KPMG International, PwC, Deloitte Touche Tohmatsu Limited, and universities such as Harvard University and University of Chicago. Governance aligns with policies of the Financial Accounting Foundation and involves liaisons from the Financial Accounting Standards Board and occasionally observers from the International Accounting Standards Board. Chairs and vice-chairs have often been senior partners from major firms or leading academics who previously served on bodies such as the American Accounting Association or advisory panels to the Securities and Exchange Commission. The group conducts public meetings and deliberations that adhere to due process similar to rulemaking practices seen at the Securities and Exchange Commission and consults with stakeholders including state insurance regulators and pension authorities like the Pension Benefit Guaranty Corporation.

Agenda items originate from practitioners at firms such as Ernst & Young, preparer organizations like General Electric and Procter & Gamble, audit committees of corporations like Apple Inc. and Walmart, and regulatory inquiries from entities such as the Securities and Exchange Commission and Public Company Accounting Oversight Board. The task force evaluates technical submissions that often concern standards issued by the Financial Accounting Standards Board and cross-border implications involving the International Accounting Standards Board and the European Securities and Markets Authority. Prioritization reflects high-profile events and topics such as revenue recognition debates following cases like Enron, fair value controversies like those arising in the 2008 financial crisis, and emerging topics including cryptocurrency exposures observed at firms like Coinbase and Tesla, Inc..

The task force issues consensus-for-exposure documents, implementation guidance, and educational materials that inform practice on topics related to standards from the Financial Accounting Standards Board and interactions with International Financial Reporting Standards. Outputs have included practice aids addressing accounting for financial instruments, leases, and revenue recognition; such publications are used by auditors at Grant Thornton, preparers at IBM and Amazon (company), and investors like State Street Corporation. Its publications have influenced technical positions adopted in commentaries by the American Institute of Certified Public Accountants and have been cited in technical staff memoranda at the Securities and Exchange Commission. The task force periodically coordinates with standard-setters for transition guidance similar to processes used by the International Accounting Standards Board and national bodies like the Canadian Accounting Standards Board.

The task force has been credited with filling a practical gap between immediate practitioner needs and formal standard-setting, with impacts noted by corporations including Ford Motor Company and financial institutions such as Bank of America. Critics argue that reliance on task force consensus may affect consistency with formal pronouncements from the Financial Accounting Standards Board and raise questions similar to debates involving the Private Company Council and other advisory groups. Its work has been discussed in academic venues at institutions like Columbia University and Stanford University and has informed litigation strategy in cases before the United States District Court for the Southern District of New York. Overall, the task force remains an influential forum connecting major firms, regulators, and standard-setters such as the Financial Accounting Standards Board and the International Accounting Standards Board.

Category:Accounting bodies