The Financial Accounting Standards Board has appointed Hillary Salo as the newest member of the board, succeeding vice chair James Kroeker when his term ends on June 30, 2024.
Salo joined FASB in 2020 as technical director and chair of its Emerging Issues Task Force and was formerly an engagement partner in the audit practice at KPMG in New York. Kroeker was formerly chief accountant at the Securities and Exchange Commission’s Office of the Chief Accountant and joined FASB in 2013. Salo will succeed him on July 1, 2024 and like Kroeker will be eligible to serve two five-year terms.
Salo spoke Monday during Financial Executives International’s Current Financial Reporting Insights conference alongside FASB chair Richard Jones and described FASB’s current projects.
One recent project that generated many comments has been on income tax reporting. FASB voted in August to approve the new standard (see story). Accounting Today asked during a press conference about whether the pushback it had received from some members of Congress might have led FASB to scale back some of the requirements in the original proposal.
“I think we’ve received a lot of feedback with regards to that project,” Salo responded. “Certain folks may have looked at the project and thought it was a move toward country-by-country tax reporting, which we’ve been very clear it is not country-by-country tax reporting. It is really providing an additional level of detail associated with the information that’s already required to be presented through the rate reconciliation or through income taxes paid. I think part of the feedback that we have heard, for folks who may not have necessarily understood why we were going down this path, providing decision-useful information to investors, part of it is an educational element to it, is making sure they understand what the project is, and importantly, what the project isn’t.”
During a panel discussion, FASB chair Richard Jones described the feedback the project had received.
“In our outreach with investors, when we started talking about the tax provision, and the information that investors were looking at, and the analysis they were doing, to be fair, for many investors, it was a bit of a black box,” said Jones. “They saw what the provision was, they’d be on the analysts call and hear management’s estimate of a run rate, and they would go with it. And they were challenged with doing their own analysis as to what they thought made sense for an ongoing effective rate for an entity. Part of that challenge was there was a great tool, the effective rate reconciliation, but when you looked at it, and you compared it from company to company, it didn’t provide a lot of detail, and it was not always presented in the same format. In other words, there may be two entities that had cross-border taxes that were very significant. However, they may present them very differently in the rate rec, and it made it challenging for an investor to take a look at that to see if there were opportunities to possibly improve on that rate and return more money to investors, or if there were potential risks.”
Salo explained how that was modified. “I think some of the feedback that Rich mentioned that the board considered and made changes on were related to income tax benefits,” said Salo. “We were looking to provide that in an even more disaggregated basis by jurisdiction, and there was some concern associated with that, concerns that historically had come up as well. And when the board was kind of reminded of some of those, they thought about it further and decided we didn’t need to provide that level of disaggregation. Certainly, we heard some feedback with cross-border taxes, as well, if you think of GILTI [Global Intangible Low-Taxed Income]. GILTI might also have a tax credit that comes along with it, and we received feedback that showing those two things on a gross basis, showing them separately, may not really be reflective of the economic reality of cross-border taxes. And so we thought that was really helpful feedback, and in certain cases, the Board did allow those reconciling items in the rate reconciliation to be presented on a net basis.”
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