EITF Explained: Purpose, Meetings, and Resolutions

The Emerging Issues Task Force (EITF) is an initiative instituted by the Financial Accounting Standards Board (FASB) in 1984 to streamline and enhance the financial reporting system. Its primary objective is to tackle emerging accounting issues promptly, ensuring consistency and adherence to generally accepted accounting principles (GAAP).

The EITF was established following recommendations from the FASB to address the need for timely resolution of narrow and emerging accounting issues within existing GAAP. By creating a dedicated task force, the FASB aimed to expedite the resolution process and prevent divergent accounting practices from gaining acceptance.

Comprising professionals from both the public and private sectors, the EITF convenes for public meetings multiple times each year. These gatherings serve as forums for identifying emerging accounting challenges and formulating standardized solutions before they proliferate across industries. Notably, FASB board members actively participate in EITF meetings to contribute to discussions and decision-making processes.

An EITF Issue holds the same validity as a FASB pronouncement within GAAP. To achieve consensus, the task force must ensure that no more than three voting members object to proposed resolutions during its annual meetings. Resolutions that garner consensus are published as EITF Issues, signifying the conclusion of the deliberation process. However, in cases where consensus cannot be reached, the FASB assumes responsibility for further action, subject to the approval of a majority of its board members.

The EITF focuses on resolving narrow and emerging accounting issues within existing GAAP, ranging from revenue recognition to financial instrument classification.

While both carry weight within GAAP, EITF Issues specifically address emerging accounting challenges, providing timely guidance to practitioners. FASB pronouncements, on the other hand, encompass broader accounting standards established by the board.

Yes, once published, EITF Issues become part of GAAP and are applicable to all entities following GAAP. Therefore, adherence to the resolutions outlined in EITF Issues is essential for consistent financial reporting.

While non-voting members may attend EITF meetings as observers or guests, active participation in discussions and decision-making processes is typically limited to voting members representing diverse industry sectors.