Frustrated investors are demanding a shake-up of the top US accounting rulemaker, saying its outdated standards mean companies’ financial statements no longer properly reflect their underlying businesses.
An influential advisory group said that the Financial Accounting Standards Board needs tough new oversight and a revamped decision-making process to speed up its work. It can sometimes take more than 20 years to update rules on how to calculate vital financial metrics such as cash flow and asset values, the group said.
“Investors have increasingly voiced concerns that accounting standard-setting has not kept pace with the evolution of the sources of value and risk, leaving investors without the information they need to value modern companies,” the US Securities and Exchange Commission’s investor advisory committee wrote in a resolution passed on Wednesday.