FASB Researching Non-GAAP Reporting

Russell Golden, chair of the Financial Accounting Standards Board (FASB), joined REIT.com for a video interview at REITWise 2016: NAREIT’s Law, Accounting and Finance Conference at the Marriott Marquis in Washington, D.C.

Golden addressed the question of whether the proliferation of financial reporting that doesn’t adhere to Generally Accepted Accounting Principles (GAAP) reporting means that the GAAP income statement needs to be examined.

Golden said FASB has been conducting research to better understand the proliferation of non-GAAP reporting, including discussions with its various advisory councils. FASB will shortly issue a paper that will articulate potential improvements to the GAAP statement of income and cash flow, according to Golden.

Potential improvements could include more disaggregation on the performance statements and operating income, he said. Additionally, there could be more types of metrics on the income statement and statement of cash flows.

Golden also stressed the importance FASB places on investor needs as it conducts its work. Two members of the board have an investor background, and Golden also pointed out that FASB has an investor advisory council. “All of that is designed so that we can understand the types of improvements that investors need,” Golden said.

Meanwhile, Golden said REITs can play a constructive role with the board in the standards-setting process by communicating the impact of changes to GAAP on their day-to-day operations.