FASB Chairman Wants to Improve Financial Performance Reporting

January 27, 2017

In a letter this month to constituents, the Financial Accounting Standards Board’s (“FASB”) Russell Golden said the board is considering a project that would improve financial performance reporting to potentially restrict non-GAAP measures. The project, which is in the research stage, gives attention to companies possibly disclosing more descriptive information in their income statements or requiring additional subtotals.

The FASB chairman’s letter reflected his opinion that an improved performance or income statement can reduce the amount of nonstandard numbers reported by companies. Golden stressed the importance of studying commonly used non-GAAP measures, commenting that the FASB’s mission is to create standards that provide financial report users with useful information. He also noted that the board will continue monitoring non-GAAP reporting practices to review potential consequences for current standard-setting projects and its future agenda.

Along with the performance reporting project, Golden said the FASB will continue reviewing non-GAAP measures while it examines opportunities to improve certain aspects of U.S. GAAP.