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Bridging the GAAP: October 2024

Centri’s Bridging the GAAP newsletter highlights this month’s news, developments and emerging issues in the accounting and financial reporting world. 

FASB Standard Setter Updates

Financial Accounting Standards Board

FASB Proposes Improvements to Hedge Accounting

On September 25, the FASB published a proposed Accounting Standards Update that would clarify certain aspects of the guidance on hedge accounting and address several incremental hedge accounting issues arising from the global reference rate reform initiative. Comments are due by November 25. The effective date of the proposed amendments will be determined based on stakeholder feedback. The proposed amendments would be applied prospectively as of the adoption date. The guidance also provides for certain transition opportunities for existing hedge relationships.

FASB Issues Proposal on Share-Based Consideration Payable to a Customer

On September 30, the FASB issued a proposed Accounting Standards Update aimed at clarifying the accounting treatment for share-based consideration payable to a customer. The proposal would revise the definition of “performance condition” for customer awards to incorporate conditions based on the volume, monetary amount, or timing of a customer’s purchases from the grantor. Additionally, it would require a grantor to estimate for forfeitures of customer awards with service conditions. Comments are due by November 14.

October 2, 2024 Meeting

The Board discussed the post-implementation review (PIR) activities completed on Topic 606 and the status of the Revenue PIR process. The Board made no decisions.

The Board continued redeliberations on the proposed Accounting Standards Update, Financial Instruments—Credit Losses (Topic 326): Purchased Financial Assets. The Board discussed the gross-up approach related to revolving credit arrangements and directed the staff to perform additional research on credit cards, other consumer revolvers, and commercial revolvers relevant to determining which assets should be included in a scope exception. The Board also directed the staff to perform additional research on credit-impaired available-for-sale debt securities.

For more information, see the FASB’s Tentative Board Decisions.

October 16, 2024 Meeting

The Board discussed the Private Company Council’s (PCC) project on the presentation of contract assets and contract liabilities for construction contractors. The Board endorsed the PCC’s decision that the scope of the presentation alternative would be private construction companies within the scope of Topic 910, Contractors—Construction. The Board endorsed the PCC’s decision to require a full retrospective transition approach and related transition disclosures. The Board also decided that when a private company initially applies the presentation alternative for contract assets and contract liabilities, it need not justify that the use of the accounting alternative is preferable as described in paragraph 250-10-45-2. The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. The Board also decided on a 45-day comment period for the proposed Update.

For more information, see the FASB’s Tentative Board Decisions.

IASB Standard Setter Updates

International Accounting Standards Board

IFRS Foundation Guide for Companies on Voluntary Application of IFRS Sustainability Disclosure Standards

The IFRS Foundation announced the publication of a guide for the voluntarily application of International Sustainability Standards Board standards. The guide aims to support companies as they start to apply the IFRS Sustainability Disclosure Standards voluntarily and help them communicate their progress to investors.

SEC Regulatory Updates

Securities and Exchange Commission

SEC Adopts Improvements to EDGAR System to Enhance Security

The Securities and Exchange Commission (SEC) adopted rule and form amendments intended to enhance the security of its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system and improve filers’ access and account management capabilities. The amendments require EDGAR filers to authorize identified individuals who will be responsible for managing their accounts, and individuals acting on behalf of EDGAR filers will need to present individual account credentials obtained from Login.gov to access those EDGAR accounts and make filings. Form ID, the application for access to EDGAR, will be modernized to make the form more user-friendly. Compliance with amended Form ID is required on March 24, 2025. All rule and form amendments will be effective on that date, and filers will be required to comply with all rule and form amendments by September 15, 2025.

Other Regulatory Updates

Hong Kong Proposes Sustainability Disclosure Standards 

The Hong Kong Institute of Certified Public Accountants (HKICPA), the sustainability disclosure standard setter of Hong Kong, announced the publication of two new exposure drafts, HKFRS S1 and HKFRS S2, with proposed sustainability-related and climate-related reporting standards for companies. The standards are fully aligned with IFRS S1 and IFRS S2 issued by the International Sustainability Standards Board (ISSB). The proposed standards will initially prioritize listed entities and regulated financial institutions in Hong Kong and will be applicable for annual reporting periods beginning on or after August 1, 2025. Comments are due by October 27, 2024.

Rikki Williams

Senior Director | CPA

Rikki is a Senior Director at Centri Business Consulting. He has more than 16 years of public and private accounting experience. View Rikki Williams's Full Bio