FASB News
Public Input Sought on Proposed Tweak to Income Statement Expense Disclosure Rules
FASB is seeking public input on a proposed adjustment to the interim effective date for new income statement expense disclosure rules, issued earlier this month. The board proposed the change on November 25 to clarify the effective date for companies with non-standard fiscal years to adopt Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, also known as the “DISE” standard. The standard, which requires public companies to provide more detailed disclosures about their income statement expenses, was originally slated to take effect for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The proposed wording changes would state that the rules will take effect for fiscal years beginning after December 15, 2026, and interim reporting periods “within annual reporting periods beginning after December 15, 2027.” Early adoption would still be permitted. Public companies have until December 10 to submit comments on the effective date change, released under Proposed Accounting Standard Update (ASU) 2024-ED800, “Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40)–Clarifying the Effective Date.” The proposal comes in response to concerns that companies with fiscal years that do not match the calendar year might mistakenly believe they had to adopt the disclosure requirements before their first annual reporting period.
AICPA News
New Valuation Guide for Business Combinations, New Guide for Employee Benefit Plans
On November 22, the AICPA announced the issuance of its new “Accounting and Valuation Guide for Business Combinations” (AVG-BC) and the 2024 edition of the “Audit and Accounting Guide for Employee Benefit Plans” (AAG-EBP). Developed by the AICPA Business Combinations Task Force, the new guide provides guidance and illustrations for financial statement preparers, auditors, and valuation specialists on the accounting and valuation considerations for business combination transactions. The association said that the guide addresses many accounting and valuation issues to help preparers, auditors, and valuation specialists understand and apply the requirements under ASC 805, Business Combinations, and ASC 820, Fair Value Measurement. The following are some of the accounting topics covered:
- Identifying business combination transactions and whether the acquired set meets the definition of a business or is a collection of assets
- Identifying the acquirer
- Measuring the consideration transferred
- Recognizing and measuring the identifiable assets acquired and liabilities assumed, and any non-controlling interests in the acquiree
- Recognizing and measuring goodwill or a gain from a bargain purchase.
PCAOB News
Board Approves 2025 Budget
The PCAOB has voted 4-1 to approve its 2025 budget of $399.7 million, an increase of 3.9% over its 2024 budget of $384.7 million. Board member Christina Ho voted against the increase, saying it is neither necessary nor justified. She noted that the PCAOB budget of the current board “has ballooned” by 40% from the 2020 budget of $284.7 million. But PCAOB Chair Erica Williams and three other board members believe the 2025 budget is justified and represents the resources needed to pursue four main goals established in the 2022-2026 strategic plan: modernizing auditing standards; enhancing audit inspections; strengthening enforcement; and improving organizational effectiveness. “Since the plan was approved by the board two years ago, we have made significant advancements in protecting investors through our oversight activities,” Williams said during the meeting. “The 2025 budget will enable the organization to build upon this success through the dedicated efforts of the PCAOB’s talented staff.” Since Williams became chair in January 2022, the PCAOB has quickly worked to modernize many interim standards adopted from the AICPA when the board was set up over two decades ago. The audit watchdog has set records in terms of enforcement actions. The inspections staff have also made improvements to firm inspection reports to provide more insight to investors, including a new part of the report that describes any independent findings. Moreover, the PCAOB is publishing reports much more quickly than before. By the end of 2024, inspections staff will have inspected 232 audit firms and 930 audits in the U.S. and abroad combined, Williams said.
