Proposal on Accounting and Disclosure of Crypto Assets Finalized

FASB unanimously voted to finalize proposed accounting rules on crypto assets—just five months after the proposal was issued for public comment. Already, the decision is being touted as a win by the crypto sector, which had pressed for the rules for years. A final standard will be published in this year’s fourth quarter. The guidance will enable crypto assets like bitcoin to be accounted for at fair value, with any changes in fair value flowing through earnings. This is a major change from what can be done now, according to the discussions. “I think in my brief term here, there hasn’t been an issue that’s excited such passion from people about something and it probably wasn’t the accounting it was really the underlying ‘something’ for those who thought it was the best thing coming and others who had a contrary view,” FASB Chair Richard Jones said. “But at the end of the day that’s not our mission—our mission is ‘to best reflect the economics of the transaction to provide investors and allocators of capital with the information we need,’” he said. “I think this moves the needle there; I think we heard overwhelmingly from investors that allocate capital based on the use of financial statements that this will provide them better information to make their decisions.” The standard will take effect for fiscal years beginning after December 15, 2024, including interim periods within those years, for all entities—public and private companies and not-for-profit organizations—according to the discussions. Early adoption will be permitted.

Public Can Now Weigh in on Proposed 2024 SEC Taxonomy, 2024 Data Quality Rules

FASB staff proposed technical improvements to the 2024 SEC Reporting Taxonomy (SRT) and the rules selected for the 2024 Data Quality Committee Rules Taxonomy (DQCRT), the board announced. FASB is responsible for the ongoing development and maintenance of the GAAP Financial Reporting Taxonomy (GRT) and the SRT. As part of efforts to develop and maintain the GRT, FASB includes proposed DQCRT with the annual GRT release to improve exposure to and compliance with XBRL US Data Quality Committee (DQC) rules. The proposal for the 2024 SRT would provide 14 new elements and 55 modified references for which the underlying recognition and measurement are not specified in GAAP but used by GAAP filers, according to the release notes text. The guidance would provide technical and other conforming improvements. FASB staff are seeking public comment by November 6, the board said. Similarly, the proposed improvements to the 2024 DQCRT relate to an XBRL representation of Data Quality Committee (DQC) rules that were selected. The staff said they are seeking public comment by October 5


ISSB and European Commission’s Sustainability Disclosure Rules Are Close

In a recent speech, International Sustainability Standards Board (ISSB) Vice Chair Sue Lloyd downplayed the differences between the board’s new climate and sustainability disclosure rules and those recently issued by the European Commission, reiterating a July announcement aimed at stemming concerns about the reporting differences that could ensue. Financial reporting differences for similar items make investors nervous, as they hinder their ability to make comparisons between companies when making investment decisions. Lloyd told Bankenverband (an association of German banks) on August 30 that the respective sets of standards have overlapping but differing mandates, with the ISSB’s remit focused on providing relevant information to investors, and the European standards having an additional broader aspect to meet public policy goals. “So, while there are differences, with the European standards including a focus on impact materiality, beyond an investor’s perspective, together we have ensured that investors will receive more consistent and comparable information around climate-related risks and opportunities,” she said. “By aligning common disclosures wherever possible, we have also reduced the risk of duplication in reporting for companies that are using both sets of standards.” The interpretive guidance is important, as the ISSB’s and the European Commission’s standards were issued at about the same time to largely serve the same marketplace—and followed efforts to unify those types of disclosure rules under the governance of the IFRS Foundation, the ISSB’s trustee body. “We believe that it would be of greatest benefit to our respective stakeholders if the ISSB, the Commission, and EFRAG are able to communicate jointly on interoperability and to ensure that we are coordinated in developing future guidance to support interoperability in application,” Lloyd said.