Insights
We are proud to be named a West Coast Regional Leader for 2024
Proposed changes to interim disclosure requirements
FINANCIAL REPORTING INSIGHTS |
Authored by RSM US LLP
As part of its disclosure framework project, the Financial Accounting Standards Board (FASB) recently issued a proposed Accounting Standards Update (ASU), Interim Reporting (Topic 270): Disclosure Framework – Changes to Interim Disclosure Requirements. The proposed ASU is intended to clarify the application of accounting principles and improve the effectiveness of reporting practices for entities preparing interim financial statements and notes in accordance with U.S. generally accepted accounting principles (GAAP). If finalized, the proposed ASU would:
- Require that an entity:
- Provide disclosure at interim periods when a significant event or transaction has occurred since the prior year-end that has a material effect on an entity, a requirement that previously was included in SEC Regulation S-X Rule 10-01, Interim Financial Statements.
- Refer a reader of interim financial statements and notes to the previous annual financial statements when providing condensed financial statements or limited notes.
- Explain that the interim results may not be indicative of the annual results or that adjustments have been made to the period to provide a more relevant depiction of the entity’s results (e.g., accruals for estimated expenditures).
- Clarify that the following three forms of financial statements and notes satisfy the interim reporting requirements under GAAP:
- Financial statements prepared with the same level of detail as the previous annual statements subject to all the presentation and disclosure requirements in GAAP;
- Financial statements prepared with the same level of detail as the previous annual statements subject to all the presentation requirements in GAAP and limited notes subject to the disclosure requirements in FASB Accounting Standards Codification (ASC) Topic 270, Interim Reporting; and
- Condensed financial statements and limited notes subject to the disclosure requirements in ASC 270.
- Amend ASC 270 to state that it and its related subtopics contain (a) complete guidance on interim reporting requirements and (b) references to interim reporting requirements detailed in other Topics.
- Eliminate the phrase at minimum from ASC 270 and add language to ASC 270 to (a) promote entities exercising discretion when considering interim reporting disclosures and (b) clarify that assessing materiality is appropriate for entities when evaluating disclosure requirements. That language also would clarify that assessing which disclosures to provide at interim periods involves considering information provided at the previous annual period.
- Clarify when comparative disclosures are required by removing phrases such as for each period presented and instead referring to making comparative disclosures when comparative statements are presented.
- Clarify the applicability of interim disclosure requirements to all entities (both public and private entities) that provide interim financial statements and notes in accordance with GAAP.
If finalized, the amendments would be applied prospectively. The FASB will determine the effective date and whether early adoption should be permitted after it considers stakeholders’ feedback. The proposed ASU is available for comment until January 31, 2022.
Let's Talk!
Call us at +1 213.873.1700, email us at solutions@vasquezcpa.com or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by RSM US LLP and originally appeared on 2021-11-03.
2021 RSM US LLP. All rights reserved.
https://rsmus.com/our-insights/newsletters/financial-reporting-insights/proposed-changes-to-interim-disclosure-requirements.html
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.