New Accounting Standard to Incorporate 14 SEC Disclosure Rules into GAAP
FASB issued an accounting standard that pulls 14 SEC disclosure requirements into the U.S. GAAP codification—provisions that will remain in “pending content” until SEC action and could therefore expire in about four years. The board published Accounting Standards Update (ASU) No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, to introduce narrow changes into GAAP from disclosures that originate in either Regulation S-X or Regulation S-K— the SEC’s rules about the form and content of financial reports. For public companies, the provisions are contingent upon when the SEC removes the related disclosure from Regulation S-X or Regulation S-K becomes effective, FASB said. For all other entities, the amendments will be effective two years later. An unusual twist to the guidance is that if the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K by June 30, 2027, “the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.” In general, the changes are expected to be welcomed by users of financial statements, enabling them to more easily compare businesses that are subject to the SEC’s existing disclosures with those that were not previously subject to the SEC’s requirements. The guidance also aligns the requirements in the codification with the SEC’s regulations. The guidance must be prospectively applied, and early adoption is prohibited.
IFRS Foundation Appoints Five Trustees, Reappoints Five for New Rotation Next Year
The IFRS Foundation appointed five new trustees, reappointed five trustees, and is still seeking to fill one remaining vacancy, the organization announced on October 6. The new appointees will succeed six trustees who will vacate their seats by year-end due to term limits. The new trustees are: Rudolph Bless, Chong-Tee Ong, Morgan Després, Richard Sexton, and Bertrand Badré, who are set to serve for an initial three-year term, effective January 1, 2024, according to the announcement. Bless is the chief accounting officer of Bank of America; Ong is chairman of the Accounting and Corporate Regulatory Authority in Singapore; Després is executive director for international climate finance, land use, and net zero macroeconomy at the European Climate Foundation (ECF); Sexton is a member of the board and the audit committee chair for Northumbrian Water and a trustee and audit and risk committee chair of Our Future Health; and Badré is the managing partner and founder of Blue Like an Orange Sustainable Capital, an investment fund that aims to finance the United Nations’ Sustainable Development Goals in emerging and developing economies. The reappointed trustees are: trustees Masamichi Kono, Robert Pozen, Kenneth Robinson, and Erhard Schipporeit, who will start a second three-year term on Jan. 1. Furthermore, Teresa Ko was reappointed to serve one more year as trustee vice chair “in light of her role as Chair of the Due Process Oversight Committee and the need to provide continuity in the Committee’s work to reflect the establishment of the ISSB,” the announcement states. Six trustees—Colette Bowe, Michel Madelain, Ross McInnes, Larry Leva, Vinod Rai and Lucrezia Reichlin—will vacate their seats at the end of December 2023, after having completed their second terms.
Audit Committee Chairs Worry about Accounting Staff Shortage
The Great Resignation was frequently mentioned as a topic of concern by public company audit committee chairs, according to a summary of conversations that the PCAOB inspections staff had with 211 audit committee chairs in 2022. While the staff shortage affected all industries during the COVID-19 pandemic, it has been especially acute in the accounting profession. Moreover, there has been a decline in the number of students majoring in accounting. “These audit committee chairs observed that turnover on the audit engagement teams and within the financial reporting roles at their respective public companies were areas of significant discussion as they both impacted efficiencies in conducting the audit,” according to “Spotlight: 2022 Conversations With Audit Committee Chairs,” published on September 28, 2023. “For example, they were concerned about the number of CPAs at the issuer responsible for financial reporting, as well as the level of staffing and the experience of the engagement team.” Each year, the staff from the PCAOB’s Division of Registration and Inspections invite audit committee chairs to have conversations in an information setting. The discussions focused on topics related to the 2021 audit of their company’s financial statements. Last year, 85% of the 211 audit committee chairs who talked to PCAOB staff had not spoken with the PCAOB before.