Proposal on Convertible Debt Backed by Accounting Firms, Other Groups

Almost a dozen accounting firms and other organizations told FASB that they agree with much of the board’s narrow proposal related to certain bonds that can be quickly converted into common stock. The proposal would clarify an issue around “convertible debt instruments with cash conversion features” and other adjustment features that have become prevalent in the market. The guidance is operable, achieves meaningful financial reporting, and ensures consistency in financial reporting, according to accounting bodies who submitted feedback by the board’s March 18, 2024. “We believe these changes, if adopted, will help achieve more meaningful financial reporting and ensure consistency in approaches in circumstances where entities offer short-term inducements to holders of convertible debt,” wrote the California Society of CPAs’ Accounting Principles and Assurance Services Committee. The guidance was issued by the FASB as Proposed Accounting Standards Update (ASU) 2023-ED600, “Debt—Debt with Conversion and Other Options (Subtopic 470-20)—Induced Conversions of Convertible Debt Instruments” on December 19, 2023, to solicit public comment. The changes would clarify how business can determine whether certain settlements of convertible debt instruments should be accounted for under the induced conversion model. The guidance was developed with the help of the Emerging Issues Task Force (EITF), which works with FASB on technical issues that arise from the application of GAAP.

EY Partner Appointed Technical Director

Ernst & Young LLP Partner Jackson Day was appointed director of technical activities at FASB, the board announced on March 20. Day will succeed current Technical Director Hillary Salo on July 1, when she vacates that seat to become a FASB member. Salo will replace Vice Chair James Kroeker, who is leaving the board due to term limits. The FASB is the nation’s developer of Generally Accepted Accounting Principles (GAAP). The technical director seat is a major role at the FASB, serving as staff leader, chair of the Emerging Issues Task Force (EITF), and principal adviser to the FASB chair. “I am very pleased that Jack will join us to lead the FASB technical staff,” FASB Chair Richard Jones said in a statement. “His years of experience, his global perspective, and his collaborative leadership style will contribute positively to the work we will do in the years ahead.” Day spent most of his 38-year accounting career at EY, which he initially joined in 1986 on the audit staff in St. Louis, Missouri, according to the announcement. He was subsequently EY Global’s director of capital markets, as well as EY’s U.S. chief accountant. Day was also deputy chief accountant, and later, acting chief accountant in the SEC’s Office of the Chief Accountant from 2000 to 2003. In earlier years, he was a practice fellow at FASB, from 1997 to 1999. He has also been a member of the EITF. Day earned his undergraduate degree in business administration at Kansas State University.


IASB Unveils Work Plan for Next Six Months

The International Accounting Standards Board (IASB) will consider adding projects to its rulemaking agenda in the coming months on intangible assets and the statement of cash flows, according to March 18 discussions. Both topics typically generate strong scrutiny and discussion from the accounting profession, for various reasons. The topics are among three on the board’s research agenda, but staff capacity will open up mid-year because the nine rulemaking projects on its technical agenda are almost complete. “Nine projects coming to an end—that’s great news,” ISSB Chair Andreas Barckow observed. “It may not be that great news for our stakeholders who have to read and implement all of them, but I think we’ve always said there are periods where we will have a lot of consultations going on and this year will be no exception,” he said. Meeting papers “allude to those that are forthcoming and it’s good to see that we’re not just consulting but we’re actually delivering.” In total, the board has 24 projects on its agenda, including the nine rulemaking projects and the three research projects. The others are eight “maintenance” projects and four taxonomy projects. “We have a number of projects that are coming to completion in the next six months,” said Shah. These include the post-implementation reviews (PIR) of several standards. “One thing to flag with the PIRs is that the completion is the completion of the PIR itself—PIRs are not standard setting projects, if there is any standard-setting project that comes out of it that would start thereafter.”