FASB to Issue One New Accounting Standard and Three Proposals This Quarter
February 10, 2023
The FASB plans to issue one new standard and three proposals by the end of this reporting quarter, according to its technical agenda as of Feb. 2, 2023.
The provisions will be the first set of GAAP-related documents to come from the board this year.
Specifically, the board will issue in either February or March a new accounting standard on investments in tax credit structures. The guidance will extend a simple accounting approach that today is limited to low-income housing tax credit (LIHTC) investments to other federal tax credit programs that attract tax equity investments. The rules will take effect next year for public companies.
Further, two of the three proposals are set for publication by the end of March: accounting for and disclosure of crypto assets that are fungible and deemed to be intangible assets; and disclosure rules about income taxes companies pay in the U.S. and in foreign countries.
Companies will get 75 days to comment on each of the proposals.
Similarly, a proposal on profits interest awards, which aims to provide illustrative examples for applying stock compensation rules, is also being drafted for issuance. Companies will get 60 days to submit comments.
If finalized, new narrowly drawn accounting standards will be issued by year-end on all three proposals, the board has said.
It can appear to be feast or famine at the FASB in terms of when accounting standard updates (ASUs) and proposals get published and there is a level of ambiguity around exactly when those documents will be issued.
During deliberations, the FASB does consider approximate timing for when to issue a proposal because a key part of its process is to solicit public comment from companies and in a busy period the responses would be sparse. The board also factors in the educational cycle of the private company sector and their reliance on learning from the public company rule adoption process which is often a year earlier. But the board does not typically announce the exact day or week a standard or proposal will come as is done by the IASB, the body that develops IFRS Accounting Standards – possibly over fears of committing to a date that snags on technical issues.
Interestingly, the issue came up during a question and answer session in December at the 2022 AICPA & CIMA Conference on Current SEC and PCAOB Developments.
“I’ve observed a recent trend [by the FASB] to issue new ASUs the last week of the month – this timing leaves companies scrambling to get [Staff Accounting Bulletin] 74 disclosures done. Can the board consider adjusting the timing of these releases?” FASB Technical Director Hillary Salo was asked by a conference attendee.
“That was a trend I was unaware of – we’re going to look into that,” she responded.
Salo stated that the board is trying to be cognizant of busy times for companies throughout the year. “But certainly we do have situations where we’re trying to get the guidance out as quickly as we can and sometimes that’s not always going to be the most advantageous for your schedules and we completely appreciate that,” she explained. “We understand if our comment letter due dates aren’t necessarily matching up with what’s going to work for you – give us a call.”
[Thomson Reuters]
