FASB proposal would amend interim disclosure requirements

By Ken Tysiac

The rules for interim disclosures in financial statements would change and be clarified under a proposal issued Monday by FASB.

Part of FASB's disclosure framework project for improving the effectiveness of disclosures in the notes to financial statements, the proposal issued Monday would:

  • Add a requirement that the SEC removed in 2018 from Regulation S-X that requires disclosure at interim periods when a significant event or transaction has occurred since the prior year end that has a material effect on an entity. The proposed amendments would add a new principle, based on the removed portion of Regulation S-X, that would apply to all entities that provide interim financial statements and notes in accordance with GAAP. The proposal also states that the resulting disclosures may be transaction- or event-specific.
  • Clarify that the following three forms of financial statements and notes are in accordance with GAAP:
    • Financial statements prepared with the same level of detail as the previous annual statements subject to all the presentation and disclosure requirements in GAAP.
    • Financial statements prepared with the same level of detail as the previous annual statements subject to all the presentation requirements in GAAP and limited notes subject to the disclosure requirements in FASB Accounting Standards Codification Topic 270, Interim Reporting.
    • Condensed financial statements and limited notes subject to the disclosure requirements in Topic 270.
  • Address feedback from stakeholders who requested that interim reporting requirements be clarified and consolidated into one topic in the codification.
  • Include amendments to clarify when comparative disclosures are required.

The proposal would update Topic 270 and would apply to all entities that provide financial statements and notes in accordance with GAAP. Comments can be submitted through Jan. 31, 2022, at FASB's website.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA's editorial director.

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