What Is the Emerging Issues Task Force (EITF)?
The term Emerging Issues Task Force (EITF) refers to an organization that aims to provide assistance and improvements to the financial reporting system. The EITF was created by the Financial Accounting Standards Board (FASB) in 1984. The organization is responsible for developing and implementing a streamlined set of accounting principles in order to prevent different practices from becoming accepted. The task force is made up of a variety of industry professionals.
- The Emerging Issues Task Force is an organization that provides assistance and improvements to the financial reporting system.
- It was created in 1984 by the Financial Accounting Standards Board to develop a streamlined and uniform set of accounting principles.
- The board holds several meetings every year to identify emerging accounting practices and develop resolutions.
- The board is made up of industry professionals from the public and private sectors.
- The EITF must reach a consensus on issues and resolutions in order for them to be ratified.
Understanding the Emerging Issues Task Force (EITF)
The Financial Accounting Standards Board was established in 1973 as an independent nonprofit organization. It develops and establishes accounting standards for corporations that adhere to generally accepted accounting principles (GAAP), including publicly traded and private companies as well as nonprofits. As such, the board is considered to be the authority for accounting standards by the Securities and Exchange Commission (SEC) and other organizations, such as the American Institute of CPAs (AICPA) and the Boards of Accountancy.
In 1984, the FASB task force made recommendations to come up with a way to issue accounting reporting guidance. This was when the Emerging Issues Task Force was created. The EITF was designed to minimize the need for the FASB to spend time and effort addressing the narrow implementation, application, or other emerging issues that can be analyzed within existing GAAP.
It holds public meetings, which are scheduled several times each year. These meetings allow the board to identify emerging accounting issues and resolve them with a uniform set of practices before divergent methods arise and become widespread. The EITF consists mainly of accountants from the private and public sectors, as well as the chief accountant of the SEC. FASB Board members also attend EITF meetings and participate in discussions.
An EITF Issue is just as valid as a FASB pronouncement and is included in generally accepted accounting principles.
The task force must be able to reach a consensus on the issues discussed and any resolutions when it meets every year. In order to reach a consensus, there can be no more than three voting members who can object to a proposition. These proposals must be put forth for public comment.
If the task force reaches a consensus on an emerging issue, it will publish an EITF Issue. This means that the FASB takes no further action. If the task force can't reach a decision, the FASB must step in and take action. According to the board's website, the FASB doesn't vote on issues discussed at EITF meetings. But a majority of board members of the FASB must approve of any and all resolutions before they are ratified.