FASB Rejects Request to Delay Credit Loss Rules, Votes to Finalize Changes
On September 18, FASB unanimously voted against delaying the effective date for new credit loss accounting rules, which large public companies that must adopt next year. The board does plan to delay the rules for a subset of companies, including small reporting companies that are SEC filers, but some companies and organizations—such as the American Bankers Association—have called for a “full and indefinite delay” of the current expected credit loss standard (CECL) for all companies, regardless of size. FASB members said the narrow proposal did not warrant a delay of the credit loss standard because it was issued to clarify, improve, or simplify issues that would reduce operational concerns on the credit loss rules, not create new issues. This means large companies, including banks and other financial institutions that are SEC filers, must adopt the rules for fiscal years (and interim periods within those fiscal years) beginning on or after December 15, 2019.
FASB Studying SEC Interim Disclosure Rules for Incorporation under GAAP
FASB plans to add a high-level principle to interim reporting disclosure rules, an approach that could facilitate better communication of the information investors find important. The board said it would revise Accounting Standards Codification (ASC) Topic 270, “Interim Reporting,” based on the portion of Regulation S-X, Rule 10-01, “Interim Financial Statements,” that was removed. The rule previously stated that interim financial statements are required to follow the general form and content of presentation prescribed by the other sections of the regulation, with some exceptions. FASB staff accountants will continue to research and do outreach with accountants and auditors to reassess disclosure requirements related to interim reporting, the discussions indicated. “I think it’s clear the board wants to not limit the research to just reduction,” FASB Chairman Russell Golden said. “We have differences in opinions about what additions [are needed].”
Proposed Changes to 2020 U.S. GAAP Taxonomy on Classification of Debt Issued
FASB has proposed updates to the 2020 U.S. GAAP financial reporting taxonomy that it hopes will reflect potential accounting changes aimed at simplifying the classification of debt in a balance sheet. The updates would add elements for disclosures of debt in default and debt with waivers, an SEC announcement stated. The rules would enable companies to provide creditors or investors with a clearer picture about the nature and types of debt they carry; such figures can reduce quarterly profits. Companies have until October 28 to comment. After the comment period for each proposed update, FASB’s XBRL team will include the updates in the Development Taxonomy for a future annual update as determined by the compliance date for the relevant accounting standard.