FASB issues standard to improve interim reporting

FASB on Monday issued an Accounting Standards Update (ASU) that aims to improve guidance on the navigability of required interim reporting disclosures.

“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 (GAAP),” FASB Chair Richard Jones said in a news release. “We expect that these clarifications will enhance consistency in interim reporting for all entities.”

According to the news release, the ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements, which were determined when the disclosure requirements were initially issued. Rather, its objective is to provide clarity on the current interim reporting requirements by:

• Clarifying that the guidance in Interim Reporting (Topic 270): Narrow-Scope Improvements applies to all entities that provide interim financial statements and notes in accordance with GAAP.
  
• Creating a comprehensive list in Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP.

• Incorporating a disclosure principle, which is modeled after previous SEC 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.

• Improving guidance about information included in and the format of interim financial statements.

The amendments in the ASU are effective for interim reporting periods within annual reporting periods beginning after Dec. 15, 2027, for public business entities. For other entities, they are effective for interim reporting periods within annual reporting periods beginning after Dec. 15, 2028. Early adoption is permitted for all entities, and the ASU can be applied either prospectively or retrospectively to any or all prior periods.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.