The Financial Accounting Standards Board published an accounting standards update with the goal of improving the navigability of the required interim reporting disclosures while clarifying when that guidance should be applicable.
The standards update also includes extra guidance on what disclosures should be provided in interim reporting periods.
“The ASU clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with generally accepted accounting principles,” said FASB chair Richard Jones in a statement Monday. “We expect that these clarifications will enhance consistency in interim reporting for all entities.”
The update doesn’t actually change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements, which were determined by previous FASB boards when the disclosure requirements were originally issued. The goal instead is to provide clarity on the current interim reporting requirements.
The amendments in the update clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with U.S. GAAP. It creates a comprehensive list in FASB Accounting Standards Codification® Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP
Incorporate a disclosure principle, which is modeled after previous Securities and Exchange Commission guidance, that requires entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity. It will also improve the guidance about information included in and the format of interim financial statements.
The amendments in the update are effective for interim reporting periods within annual reporting periods starting after Dec. 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after Dec. 15, 2028, for entities other than public business entities. Early adoption is allowed for all entities. The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.
On Monday, Jones discussed several of FASB’s recent accounting standards updates and projects during the AICPA Conference on Current SEC and PCAOB Developments in Washington, D.C. He also noted that the Financial Accounting Foundation trustees would begin searching for his replacement next year before his term concludes on June 30, 2027.
“Our trustees will be going out and doing a search for both my replacement and Marsha [Hunt]’s replacement, another of our board members, at the beginning of next year,” he said. “So if any of you have a real interest in standard-setting and a desire to come to Norwalk [Connecticut] and set standards and improve financial accounting and reporting, I’d encourage you to think about it. I will tell you that while earlier in my career I could never have envisioned doing this, it’s certainly been an enjoyable time here at the FASB. You get to meet a lot of interesting people with a lot of ideas on how you can improve financial accounting and reporting, so I encourage you to think about it and consider it.”
