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Accounting Due Process: FASAB’s Rules of Procedure
The Federal Accounting Standards Advisory Board since its establishment in October 1990 has devoted itself to serve the public interest by improving federal financial reporting through issuing federal financial accounting standards and providing guidance after considering the needs of external and internal users of federal financial information. It has become a significant entity not just for the accounting industry but also for those other industries that involve auditing, payroll, and taxation in general. The accounting outsourcing industry is also put into a conversation as any movement to the standards of accounting set by FASAB should be reflected in their procedures regardless if they are offshore or within the boundaries of the federal state.
As complex at it may seem to decide on actions on how to keep the accounting standards in good shape, FASAB has been able to stay true to its mission thanks to its rules of procedure which has also been their guideline in adhering to the Federal Advisory Committee Act. Through this, FASAB can ensure that the common understanding of the information provided through financial reporting by participating in educational efforts and that its own accountability through governance practices that are transparent and consistent with the Memorandum of Understanding among its sponsors. This is all while considering the views of other accounting trend-setters (international trend, trends upheld by other industries like accounting outsourcing, the World Bank, and offshore markets) and the stakeholders.
In order for FASAB to conduct a timely, open, and thorough study of the accounting issues that might affect the accounting standards, FASAB acts on the following steps:
1. Identification of accounting issues and agenda decisions. FASAB consults and syncs with the Executive Director to first identity projects that need prioritization among its potential projects. When a new project is decided it is added to the list of active agendas and is weighed by the board on how to deliberate on them. A pre-agenda research should be conducted to ensure that the issue has supporting data before being presented in a meeting.
2. Preliminary deliberations. The FASAB deliberates on active agenda items at its meetings. Through this process, FASAB will able to ensure that all issues are identified and alternatives resolution to issues are developed, assessed, and ranked.
3. Preparation of initial documents. FASAB requires that documents that provide background information about the presented issue, summaries of the concepts being developed, and initial listing of options including the possible impact of the resolution are initially prepared before a meeting.
4. The release of documents for comment (e.g., exposure drafts) to the public, public hearings when necessary, and consideration of comments.
5. Further deliberations and consideration of comments. As the situation demands, FASAB may go under series of deliberations that will require members of the board to further investigate and schedule a further meeting that requires further preparation of documents to support the proposed solution to the issue.
6. Voting. When the Board has finally decided to proceed to a final pronouncement due to the lack of further substantive revisions to the proposal in the exposure draft then it will require the approval by at least a two-thirds majority affirmative vote of the board.
7. Submission of proposed Statement to the Principals for 90-day review (45 days for Interpretations).
8. Publication of final Statement or Interpretation. The final statement is then released for public dissemination.
Accounting will remain as a pillar industry that holds other industries to stay intact. And with the help of the Rules of Procedure, we can make sure that we will be able to uphold a fair and safe system of accounting.
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