The Financial Accounting Standards Board (FASB) is looking to provide investors and other stakeholders some clarity on the current interim reporting requirements, specifically when that guidance is applicable and which disclosures are required in interim reporting periods.
A proposed Accounting Standards Update (ASU) issued by the FASB on Nov. 13 isn’t intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but to clarify the current guidance, the board said.
In the proposed ASU, the FASB says:
The Board has received feedback from stakeholders that Topic 270, Interim Reporting, is challenging and complex to navigate. The complexity of this Topic is mainly a result of the development of the source literature, the initial codification of the historical content, and subsequent amendments to the Topic as new accounting guidance was issued over time. Accordingly, the Board sought to clarify the types of interim reporting that are subject to the requirements in Topic 270.
The Board previously considered amendments to interim reporting in Topic 270 as part of the Disclosure Framework project, which resulted in the issuance of proposed Accounting Standards Update, Interim Reporting (Topic 270): Disclosure Framework—Changes to Interim Disclosure Requirements, in 2021. Although respondents to that proposed Update supported the Board’s efforts, they expressed concerns about the proposed amendments. When redeliberating the 2021 proposed Update, the Board decided that the project’s objective is to improve the guidance in Topic 270 by clarifying when that guidance is applicable, thereby improving the navigability of the required interim disclosures. The Board also decided to provide additional guidance on what interim disclosures should be provided in interim reporting periods.
The amendments in the proposed ASU would:
- Clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with Generally Accepted Accounting Principles (GAAP).
- Create a comprehensive list in Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP.
- Incorporate a disclosure principle, which is modeled after a previous Securities and Exchange Commission principle, that would require entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity.
- Improve guidance about information included in and the format of interim financial statements.
Stakeholders have until March 31, 2025, to provide comments about the proposed ASU to the FASB.
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