Proposed Improvements for Taxonomy Issued
Companies can now weigh in on whether they agree with the proposed technical and other conforming improvements for the 2021 US GAAP Financial Reporting Taxonomy, FASB’s taxonomy staff announced on October 1. Proposed updates to improve the taxonomy are generally designed to reduce inconsistencies in application, remove redundancies, and enhance the intended use of the elements without causing significant disruption.
The proposed changes include:
- New elements for asset acquisitions, credit losses, debt securities, leases, reorganization, variable interest entities, and banking regulation disclosures;
- Deprecations for guidance that has been superseded and that assist in improving consistency and structure for the topical projects related to accounting changes and reorganizations; and
- Modifications of standard and documentation labels to clarify elements and improve appropriate usage.
Comments are due by November 2.
FASB Finalizes Delay on Life Insurance and Annuities
On September 30, FASB voted 6 to 1 to finalize a July proposal to delay the long-term insurance accounting rules for a second time, citing the need to give insurers adequate time to properly implement the changes amid the coronavirus (COVID-19) pandemic. The rules were drawn to simplify targeted areas in reporting life insurance, disability income, long-term care, and annuity payouts. Board members said though insurers likely could have adopted the rules in time, the information that would have resulted from that would not have been of high quality . “It became very clear that the short cuts would have resulted in lower quality information and the short cuts would have become permanent, they would not have gone back and incurred additional costs to take out the short cuts and put in something more permanent,” FASB member Harold Schroeder said. “I think waiting one year longer to get something better in the longer term is worth the wait,” said. FASB member Christine Botosan reaffirmed her dissent on deferring the rules, stating investors will be left worse off from having to wait longer for more transparent information.
Consultation Document to Establish Global Sustainability Standards Board Published
The IFRS Foundation has published a consultation document to solicit public feedback on whether to establish a new global sustainability standards board under its governance structure. The board would be called the Sustainability Standards Board (SSB) and would initially focus on standardizing reporting rules on climate-related matters. “The SSB could prioritize climate-related risk because of its urgency but could also consult on other environmental priorities,” the document, “Consultation Paper on Sustainability Reporting,” states. “A set of comparable and consistent standards will allow businesses to build public trust through greater transparency of their sustainability initiatives, which will be helpful to investors and an even broader audience in a context in which society is demanding initiatives to combat climate change.” The consultation document comes amid heightened focus on environmental, social, and governance (ESG) matters, developments in sustainability reporting, and increased calls for standardization of such reporting. Companies, trade groups, and other organizations have until December 31 to submit comments.