IRS issues guidance regarding increased energy credit.
The IRS has issued final regulations under Revenue Procedure 2023-27 to provide guidance for owners of certain solar or wind facilities built in connection with low-income communities. The guidance provides definitions, requirements, and procedures applicable to the IRC section 48(e) low-income communities bonus energy investment credit program established under the Inflation Reduction Act. The act provides for an increase in the energy investment credit for solar and wind facilities that apply for and receive an allocation of environmental justice solar and wind capacity limitation. Taxpayers that receive an allocation and properly place the facility in service may then claim the increased energy investment credit in the year that the facility is placed in service. The final regulations provide definitions and requirements for the program. The regulations list the four project categories under which facilities apply for an allocation, and the increase of either 10% or 20% associated with a project category.
Educational material on natural and social aspects of climate-related disclosures coming soon.
The International Sustainability Standards Board (ISSB) said that its staff are developing educational materials to illustrate the application of new climate disclosure requirements in the context of the natural and social aspects of related risks and opportunities. The material aims to help companies with how to consider risks and opportunities around areas such as water, biodiversity, deforestation, and transition, ISSB Chair Emmanuel Faber explained on an August 1 board podcast. In June, the board published IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and S2, Climate-Related Disclosures, to take effect in 2024. Under S1, businesses must disclose all sustainability-related risks and opportunities that could reasonably be expected to affect their cash flows, access to finance or cost of capital over the short, medium, or long term that could reasonably be expected to affect prospects. S2 is specific to climate-related risks to which the entity is exposed—that is, climate-related physical risks, transition risks, and opportunities available to the entity.
IASB accounting rules and ISSB sustainability disclosure provisions interconnect well, boards’ vice chairs say.
New disclosure rules on climate and sustainability matters borrowed from concepts used in IFRS, ensuring that both sets of rules mesh well together. The ISSB’s standards are aimed at ensuring that “investors have the information that they need to understand how sustainability-related risks and opportunities affect a company, and how a company is responding to those risks and opportunities,” Vice Chair Sue Lloyd told a board webcast. “We were really careful to think about how the disclosures we ask for relate to what is set out in the accounting standards and what’s reported in the financial statements.”
Staff propose updates to U.S. GAAP taxonomy on disclosing income statement expenses.
FASB staff members are seeking public input about how to tag proposed guidance for disclosing income statement expenses in the U.S. GAAP Taxonomy, the board announced on July 31. The taxonomy is a list of computer-readable tags in Extensible Business Reporting Language (XBRL) that allows companies to label the financial data in financial statements so that they can be filed electronically. Staff members are seeking input about whether to use: option 1—a line-item approach; or option 2—a dimensional approach to structure. Option 1 would provide specific line-item elements for each relevant expense caption and further disaggregation of inventory and manufacturing expense, according to release notes. Option 2 brings a dimensional structure with a member for each relevant expense caption and generic line-item elements for further disaggregation of inventory and manufacturing expense. Proposed Accounting Standards Update (ASU) 2023-ED500, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses, was issued for public comment. The taxonomy team is seeking comments by Oct. 30, including insights as to why an approach should be selected.
AICPA board to vote on proposal on quality management attestation standards.
The AICPA’s Auditing Standards Board (ASB) held a special meeting to vote to issue proposed quality management (QM) statements on standards for attestation engagements (SSAE). Initially, the ASB’s Attestation Standards Task Force had planned to present proposed QM SSAEs in June for the board’s vote. The task force titled the exposure draft as SSAE, “Amendments to the Attestation Standards for Appropriate Consistency With the New and Revised Quality Management Standards.” According to a discussion paper prepared for the meeting, the ASB will be voting for a proposal that would primarily revise AT-C section 105, “Concepts Common to All Attestation Engagements,” and also to the documentation requirements in sections 205, “Assertion-Based Examination Engagements,” 210, “Review Engagements,” and 215, “Agreed-Upon Procedures Engagements.” These planned revisions are intended to conform with the QM standards that the AICPA published in June 2022.