No New Efforts on Digital Assets Underway

FASB has concluded its work on crypto assets, with no new projects related to digital assets currently in development, according to Hillary Salo, the board’s technical director. Salo confirmed that the board’s focus has shifted to other priorities, including intangibles, during a panel discussion at the 42nd Annual SEC and Financial Reporting Conference held by the University of Southern California and Financial Executives International on June 6. “We haven’t gotten any additional requests to take on projects on either our technical or our research agenda, so currently we don’t have any projects in the pipeline related to crypto assets,” Salo explained. Instead, the board is turning its attention to other topics, including intangibles, which Salo noted are a significant area of emphasis for the FASB. FASB’s groundbreaking crypto accounting standard, introduced in December 2023, sets new rules for accounting and disclosure of digital assets such as Bitcoin and other tokens. The standard, which takes effect in 2025 or earlier, requires companies to measure digital assets at fair value and disclose significant holdings, contractual sale restrictions, and changes during the reporting period. Salo noted that the standard has been well-received by investors and corporations, who had been clamoring for clarity on digital asset accounting. “Certainly, since we’ve issued it, we’ve gotten good feedback with regards to the fact that this is really addressing that most significant concern and that by reflecting these assets at fair value, that has addressed some of the practice issues that existed previously,” she stated.


Interpretations Committee Strengthened with Three New Appointments

The IFRS Foundation announced the appointment of audit and finance executives Mark Mahar, Natsumu Tsujino, and Leon Yongbum Kim to the IFRS Interpretations Committee, effective July 1. The Interpretations Committee plays a crucial role in supporting the consistent application of International Financial Reporting Standards (IFRS) by working closely with the International Accounting Standards Board (IASB). The committee responds to questions on the application of IFRS and undertakes other work as requested by the IASB. The three new members will serve three-year terms and bring a wealth of experience to the committee, which comprises 14 voting members. Mark Mahar, a partner at EY in the United States, has over 28 years of experience in audit, regulatory, and accounting matters, including leases, consolidation, and climate reporting. He has advised the EY global network on emerging IFRS-related financial reporting matters and led the firm’s global implementation of converged accounting standards and US GAAP. Natsumu Tsujino, an investor and senior fellow at Sompo Holdings in Japan, has more than 20 years of experience as an equity analyst and almost 25 years of experience in the insurance and banking sectors. She advises on financial strategy, financial reporting, and investor relations, drawing from her extensive experience. Leon Yongbum Kim, head of finance office for KT&G Corporation, a listed FMCG company in the Republic of Korea, has over 25 years of experience in finance, including accounting, tax, treasury, asset management, and investor relations. He previously served as the head of investor relations for the company. Mahar, Tsujino, and Yongbum Kim will succeed Guy Jones, Goro Kumagai, and Jon Nelson, respectively, on the Interpretations Committee.


Rule Intended to Increase Auditor Accountability Adopted

Less than a year after proposing a rule intended to more effectively deter auditor misconduct, the PCAOB on June 12, 2024, voted unanimously to adopt the rule by fully using the enforcement authority granted by the Sarbanes-Oxley Act of 2002. The adopting release updates the board’s auditor contributory liability standard from “recklessness” to “negligence,” aligning it with the same standard of reasonable care auditors are already required to exercise when they perform audits of a public company’s financial statements. Recklessness represents a level of culpability that is higher than negligence. Today, “even when a firm commits a violation negligently, an associated person of that firm who directly and substantially contributed to the firm’s violation could be sanctioned by the PCAOB only if the PCAOB were to show that the associated person acted recklessly,” the board explained. The board is aligning PCAOB rules “to what investors already expect: that when an associated person’s negligence directly and substantially contributes to firm violations, the PCAOB has tools to hold them accountable,” said PCAOB Chair Erica Williams. The contributory liability standard is in Rule 3502, Responsibility Not to Knowingly or Recklessly Contribute to Violations, which became effective in 2006.