FASB and IASB Confirm Support for Converged Revenue Recognition Standards

FASB, the primary standards-setter for financial reporting in the United States, and the IASB, its global counterpart, signaled their commitment to maintaining converged revenue recognition standards, despite ongoing reviews and refinements. This convergence is crucial for multinational companies, who value consistency in financial reporting across different jurisdictions. While both boards acknowledged some challenges and areas for improvement, they emphasized that no fundamental changes are planned, and that any refinements will be made with convergence in mind. “When particularly multinationals go through and highlight the avenues they like on the revenue recognition standard, convergence is toward the top of the list,” FASB Chair Richard Jones said. “Whenever we do standard setting we do factor in whether or not it’s convergence or not, and we certainly appreciate all the work that went into getting to a relatively converged revenue standard.” Similarly, IASB Chair Andreas Barckow noted that, as an international standards setter, calls for convergence are to be expected. He cautioned that some may invoke convergence only when it serves their interests, embracing it when they like the outcome but advocating for independent standards when they don’t. But Barckow emphasized that convergence is vital, particularly for revenue recognition, a critical aspect of financial reporting.


ISSB Publishes Feedback Statement Setting the Course for Global Sustainability Disclosure

The International Sustainability Standards Board (ISSB) published its Feedback Statement on June 24, formally outlining its strategic direction and work plan for 2024–2026. The statement reaffirms the board’s commitment to developing a global baseline of sustainability-related financial disclosures, focusing on investor needs and maintaining flexibility to address emerging sustainability risks and opportunities. It emphasizes that the ISSB will prioritize supporting the implementation of IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, Climate-related Disclosures, which are considered high-priority tasks. The board will also focus on enhancing the Sustainability Accounting Standards Board (SASB) standards and beginning new research projects, categorized as moderate-priority activities. Core activities will ensure connectivity with the International Accounting Standards Board (IASB), interoperability with other sustainability standards, and engaging with stakeholders. Furthermore, the ISSB will assess project priorities based on criteria including importance to investors, deficiencies in current disclosures, affected companies, pervasiveness and acuteness, interconnection with other projects, complexity and feasibility, and capacity to progress. “As we embark on our new two-year work plan that will see us strengthen and build out the global baseline of sustainability-related financial disclosures, I am grateful to our partners in the sustainability reporting landscape for their commitment to delivering an efficient, effective sustainability disclosure system for capital markets,” ISSB Chair Emmanuel Faber said in a statement.

IASB Pushes Ahead on Digital Financial Reporting Amid AI Revolution.

The International Accounting Standards Board (IASB) is making rapid progress in its efforts to modernize financial reporting, with a focus on harnessing digital technologies to improve transparency and efficiency. In a significant step forward, the IASB plans to release an updated guide for regulators on using taxonomies, including the IFRS accounting taxonomy and the new sustainability taxonomy, later this year. The guide will be written in a way that’s easier to understand, making it more accessible to regulators who may not be experts in digital financial reporting formats like Extensible Business Reporting Language (XBRL). The IASB’s work on digital financial reporting is expected to be more closely tied to its efforts on standards-setting, with a focus on considering digital implications from the start of a project. This approach will make it easier to create high-quality digital financial reports that can be easily consumed and processed. During June 20, 2024, discussions board members also emphasized the potential of artificial intelligence (AI) to transform financial reporting, making it easier to process and understand financial information. This could have far-reaching implications for the accounting and finance industries, according to the discussions. IASB Chair Andreas Barckow said, “You think this is something that is at least a generation away, but it’s actually probably around the corner.” Barckow stressed the need for the IASB to “horizon scan” and be prepared to adapt to the rapid changes being brought about by AI.