Most members know IMA® (Institute of Management Accountants) as a leading voice within the management accounting profession. But that wasn’t always the case. Here’s a brief history of one of its most influential committees, the Financial Reporting Committee (FRC).
During the first 50 years or so after IMA (originally National Association of Cost Accountants or NACA) was founded, the association avoided expressing a public opinion on proposed accounting rules. That changed in 1968, when the IMA Board concluded “that the association had reached the level of importance and maturity where it could make its voice heard.” The result was the formation of the Committee on Accounting and Reporting Concepts, renamed the Management Accounting Practices (MAP) Committee the following year.
The MAP Committee quickly took on a thought leadership and advocacy role within the profession, publishing Statements on Management Accounting and forming subcommittees to study a variety of accounting concepts, including inventory valuation, fixed assets, segment reporting, and more. The committee also commented on proposals by the Accounting Principles Board, and members testified before Congress and the Securities & Exchange Commission.
In the 1990s, the MAP Committee split into two separate groups: the Management Accounting Committee (whose work was eventually taken on by the IMA Foundation for Applied Research, now the IMA Research Foundation) and the Financial Reporting Committee, which assumed the “voice with standards-setters” role.
The FRC has maintained a powerful presence within the profession from its earliest days. Its members are preparers of financial statements from some of the world’s largest companies, professionals from major accounting firms, accounting consultants, academics, and analysts. Currently led by Nancy Schroeder, CPA, the committee issues comments on proposed standards of the Financial Accounting Standards Board (FASB), the Securities & Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB), and the International Accounting Standards Board (IASB). The FRC proactively brings relevant issues to the attention of these organizations and suggests solutions on behalf of IMA’s members and the profession at large.
The FRC is composed of about 20-25 members, many of whom have played senior leadership roles within their respective organizations and have served on the FRC for many years. In some cases, Committee members invite a colleague to serve as an alternate, who not only may stand in for the general member but also may participate in all regular activities such as attending sessions with regulators and standard-setters and serving on working groups that prepare comment letters.
Prominent leaders in accountancy have served on this Committee, and many continue to serve, actively. Among its roster, the FRC includes:
Dennis R. Beresford, CPA: An IMA member since 1962, Beresford joined the MAP Committee in the mid-1980s. After leaving his position as national director of accounting standards at EY to become chair of the FASB in 1986, he also departed from the MAP Committee. He rejoined the FRC in 1997 after leaving the FASB to serve on the faculty of the Terry College of Business at the University of Georgia. In 2013, he received IMA’s first Distinguished Member Award.
Al King, CMA, CFM: A member of the first class of CMA® (Certified Management Accountant) certificate holders and an IMA member since 1964, King’s affiliation with the committee began in 1981, when he became managing director of professional services for the NAA (National Association of Accountants, another IMA predecessor organization). He held this position until 1991 and four years later, he became chair of the MAP Committee. King is the recipient of numerous Lybrand Awards for his articles published in Strategic Finance and Management Accounting Quarterly.
Norman Strauss, CPA: Strauss retired as a partner at Ernst & Young in 2001 and is currently serving as EY’s executive professor in residence at Baruch College, where he teaches contemporary accounting in the graduate school. Strauss was EY’s national director of accounting standards as well as EY’s representative on the FASB’s Emerging Issues Task Force and the Financial Accounting Standards Advisory Council.
John E. Stewart, CPA: Currently managing director and co-founder of Financial Reporting Advisors, LLC, Stewart joined IMA in 1988 and soon afterwards became a member of the FRC. Prior to founding his firm, Stewart was a partner at Arthur Andersen, where he was director of U.S. accounting principles in the firm’s Professional Standards group and represented the firm before the FASB, SEC, AICPA, and IASB. For 10 years, he was also a member of the FASB’s Emerging Issues Task Force.
Most members have found service on the committee incredibly valuable. Reflecting the sentiments of many, Stewart remarked, “It’s been one of the better decisions of my professional life. The contacts and friends I’ve made, plus the opportunities to impact the profession at such a high level, have been great experiences.”
Other committee members noted the important role that the committee serves. According to Beresford, “We represent such a diverse group and that means we provide input that standards-setters don’t get from other places. Each of us comes from a different perspective, yet we respect each other’s opinions. In cases where we don’t reach a consensus, we admit that and offer our diverse insights. The power of the committee is that we’re able to say things that we might not be able to from our individual firms or organizations.”
This Committee is a commitment, and it requires the contribution of professionals with deep expertise in the technical concepts and complex financial reporting standards under U.S. GAAP and IFRS. Over the next few months, the FRC plans to open up a limited number of seats to qualified IMA members. For more information, please visit the Financial Reporting Committee page on the IMA website or contact Shari Littan, CPA, JD, IMA director, corporate reporting research and policy, at firstname.lastname@example.org.