IASB News

Chair Barckow Prioritizes ‘Connectivity’ in Financial Reporting

IASB Chair Andreas Barckow said “connectivity” has become increasingly important in financial reporting, a concept not traditionally emphasized in the field or in the board’s conceptual framework. Connectivity refers to the relationship between different pieces of financial information and how they interact with one another, which was not a key consideration when financial statements were viewed as the central element of corporate reporting. With the rise of integrated reporting and sustainability standards, however, there is a growing need to understand how financial information connects to other types of data, including sustainability-related disclosures, Barckow said in a speech at the European Accounting Association (EAA) Annual Congress, published on May 24 on the board’s website. His remarks come as the creation of the International Sustainability Standards Board (ISSB) and the consolidation of sustainability reporting organizations under the IFRS Foundation over the past few years have heightened the focus on connectivity, as companies now expect sustainability disclosures to meet the same quality standards as financial reporting. The ISSB‘s standards require entities to provide information that enables users to understand connections within sustainability-related financial disclosures and between those disclosures and other financial reports.

FASB News

Taking a New Approach to Address Tricky Topics: Intangibles, Non-GAAP Measures, Cash Flows

FASB Chair Richard Jones said the board would maintain “an open mind” to determine the most effective accounting methods for tricky projects like intangible assets, non-GAAP measures, and the statement of cash flows, suggesting that both narrow and broad fixes might be considered once more information is gathered. “Maybe the key is we’re going to try something different and it’s really to the extent that some of our stakeholders have solutions, we’re certainly interested in hearing them but maybe the answer isn’t as broad as we’ve tried in the past,” he said at the May 21 meeting of the Standard-Setting Process Oversight Committee, a trustee division of the Financial Accounting Foundation. Jones suggested the board would consider adopting a flexible approach towards creating accounting models for intangible assets, acknowledging that a one-size-fits-all model may not be appropriate. He highlighted the potential differences in accounting needs for various types of intangible assets, and also pointed out inconsistencies between models for internally developed intangibles and those acquired in business combinations.

GASB News

Landmark Standard to Improve Transparency and Comparability Issued

After a decade of effort, GASB issued a new accounting standard aimed at improving the information state and local governments provide in their financial statements. The board issued GASB Statement 103, Financial Reporting Model Improvements, to enhance the comparability, consistency, relevance, reliability, and understandability of financial information provided by state and local governments. The provisions were issued on May 28, 2024, but take effect for fiscal years starting after June 15, 2025, with earlier application encouraged. Statement 103 introduces or alters existing accounting and financial reporting standards for state and local governments in several areas. These include management’s discussion and analysis (MD&A), reporting on unusual or infrequent items, the presentation format for proprietary fund financial statements, disclosure about major component units, budgetary comparisons, and financial trend data in the statistical section. GASB made a conscious decision to control costs by not requiring additional information that some stakeholders had requested, such as a schedule of government-wide expenses by natural classification and additional requirements for debt service fund information or cash flow statements, according to text of the provisions. The board also chose not to include certain changes that would not improve conceptual consistency without diminishing the value of the information in the statements. Despite some criticism from stakeholders who felt the board didn’t go far enough on certain issues, the new standard is expected to significantly improve the transparency and comparability of government financial reporting, the rules explain. By standardizing accounting policies and presentation formats, Statement 103 will make it easier for users to compare the financial performance of different governments and make more informed decisions. The standard also amends and supersedes various provisions in existing financial reporting and accounting.