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Bridging the GAAP: April 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)

April 3, 2024 Meeting

The Board discussed potential paths forward for the project and decided to leverage the accounting framework within IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, for government grants and to include targeted improvements to the guidance based on certain previous Board decisions, including scope and recognition threshold. The Board also decided to provide limited implementation guidance, focusing on areas that differ from the requirements in IAS 20, including scope.

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

April 10, 2024 Meeting

The Board discussed the predominant characteristics assessment in Topic 815, Derivatives and Hedging, and the interaction between Topic 606, Revenue from Contracts with Customers, and other Topics (such as Topic 815 and Topic 321, Investments—Equity Securities) related to the accounting for the grantee of a share-based payment in a contract with a customer. The Board also discussed transition requirements, benefit-cost analysis, and comment period for a proposed Accounting Standards Update.

The Board continued redeliberations on the 2021 proposed Accounting Standards Update, Interim Reporting (Topic 270): Disclosure Framework—Changes to Interim Disclosure Requirements. The Board decided to:

1. Reference the going concern evaluation guidance in Topic 270.
2. Exclude instructional paragraphs from the interim disclosure list.
3. Clarify that the disclosures in Topic 320, Investments—Debt Securities, are required in interim periods.
4. Clarify the following on the form and content of interim financial statements for not-for-profit entities:
   • Net assets with donor restrictions and net assets without donor restrictions are required to be presented regardless of relative significance to total assets in the statement of financial position.
   • The guidance to condense the statement of activities applies to all expenses by nature and function regardless of where they are reported.
   • The requirement to provide a statement of changes in stockholder’s equity and noncontrolling interest is not applicable.
5. Use the same clarifying language in the proposed Update that was used in Accounting Standards Update No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, for those amendments that relate to interim disclosure requirements.
6. Not to include information about the entity scope for each disclosure in the interim list in Topic 270.

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

FASB Removes References to the Concepts Statement

The FASB issued an Accounting Standards Update (“ASU”) to remove references to the Conceptual Framework in the Codification. The Conceptual Framework establishes concepts that the Board considers in developing standards. The FASB noted that references to the Concepts Statements in the Codification could have implied that the Concepts Statements are authoritative. Also, some of the references removed were to Concepts Statements that are superseded.

Although the amendments are not intended to result in significant accounting change, the FASB recognized that changes to guidance may require transition.

The ASU (2024-02) is effective for public business entities for fiscal years beginning after December 15, 2024, and for all other entities for fiscal years beginning after December 15, 2025. Early application is permitted.

IASB Standard Setter Updates

International Accounting Standards Board (IASB)

IASB issues IFRS 18

The IASB issued IFRS 18, a new standard on presentation and disclosure in financial statements, which replaces IAS 1. The key concepts in IFRS 18 relate to:

• The structure of the statement of profit or loss.
• Required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity’s financial statements (that is, management-defined performance measures).
• Enhanced principles on aggregation and disaggregation that apply to the primary financial statements and footnotes.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027. Early application is permitted.

SEC Regulatory Updates

Securities and Exchange Commission (SEC)

SEC Adopts Reforms Relating to Investment Advisers Operating Exclusively Through the Internet

The SEC adopted amendments to the rule permitting certain internet investment advisers to register with the Commission (the “internet adviser exemption”). The amendments will require an investment adviser relying on the internet adviser exemption to have, at all times, an operational interactive website through which the adviser provides digital investment advisory services on an ongoing basis to more than one client. The amendments will also eliminate the current rule’s de minimis exception by requiring an internet investment adviser to provide advice to all of its clients exclusively through an operational interactive website and to make certain corresponding changes to Form ADV.

SEC Stays Climate Disclosure Rules

On April 4, the SEC stayed its climate disclosure rules to “facilitate the orderly judicial resolution” of pending legal challenges. In issuing a stay, the SEC noted it is not departing from its view that the final rules are consistent with applicable law and within the SEC’s long-standing authority to require the disclosure of information important to investors in making investment and voting decisions.

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