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Bridging the GAAP: August 2026

Centri’s Bridging the GAAP newsletter highlights this month’s news, developments and emerging issues in the accounting and financial reporting world. 

Standard Setter Updates

Financial Accounting Standards Board (FASB)

July 29, 2026 Meeting

The Board decided to add a project to its technical agenda on goodwill impairment testing to address (1) the level at which goodwill is tested for impairment and (2) the frequency of the testing.

For more information, see the FASB’s Tentative Board Decisions.

August 5, 2026 Meeting

The Board added a project to its technical agenda to refine the normal purchases and normal sales (NPNS) scope exception to accommodate retail electricity power purchase agreements (PPAs). The Board agreed with the following Emerging Issues Task Force decisions:

1. Issue Scope—The recommended solution applies to retail electricity PPAs and buyers only.
2. Approach—The recommended solution is a targeted refinement of the NPNS scope exception.
3. Disclosures—The recommended solution requires additional disclosures.

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot and decided that the proposed Update should have a 45-day comment period.

The Board discussed feedback received on the proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions. The Board affirmed its decision that the amendments should apply only to investment companies within the scope of Topic 946, Financial Services—Investment Companies. The Board decided that the amendments should be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.

The Board decided to add a project to the technical agenda to address the fair value measurement of equity securities subject to contractual sale restrictions for all entities.

For more information, see the FASB’s Tentative Board Decisions.

August 19, 2026 Meeting

The Board added a project to its technical agenda to address when payments made on behalf of a customer, or to a customer of an entity’s customer, should be accounted for as consideration payable to a customer under Topic 606, Revenue from Contracts with Customers. The Board agreed with the following Emerging Issues Task Force decisions:

1. Scope of consideration payable to a customer—Payments made on behalf of a customer, or to a customer of an entity’s customer, should be accounted for as consideration payable to a customer under Topic 606 when either (a) there is an explicit or implicit promise to the customer that such payments would be made or (b) the payment represents an in-substance price concession to the customer that has a reasonable expectation that the payment will be made to the customer’s customer.
2. Entity scope—The proposed amendments would apply to all entities.
3. Required versus optional—The proposed amendments would be required for all entities.

Additionally, the Board decided to add illustrative examples to Section 606-10-55 addressing payments made to a customer’s customer and payments made on behalf of a customer and provided suggestions and observations about those examples. The Board decided not to provide additional guidance on “reasonable expectations” (e.g., if the payment is reasonably known).

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot and decided that the proposed Update should have a 30-day comment period.

The Board continued deliberations on the Accounting for Transfers of Crypto Assets project. The Board decided that the control guidance in Topic 606, Revenue from Contracts with Customers, should not apply to crypto asset lending transactions. The Board decided to provide the following guidance for crypto asset lending transactions: 

1. Crypto asset lending transactions should not result in derecognition of the transferred crypto assets.
2. An entity should reclassify the crypto asset in its statement of financial position separately from other assets not so encumbered and caption it as such.
3. In measuring the encumbered crypto asset at fair value in the statement of financial position in accordance with paragraph 350-60-35-1, the fair value of the asset should reflect the credit risk, if any, of the counterparty that holds the crypto asset during the loan.

For all other transfers of crypto assets, the Board decided to clarify that the control guidance in Topic 606 is applicable and, in certain circumstances, the evaluation of whether control of crypto assets has transferred may be assessed primarily from the perspective of the transferring entity rather than the counterparty. The Board decided to provide crypto-specific implementation guidance in Subtopic 350-60, Intangibles—Goodwill and Other—Crypto Assets, to assist entities in evaluating the control indicators in Topic 606 for crypto asset transfers.

The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot and decided that the proposed Update should have a 60-day comment period.

For more information, see the FASB’s Tentative Board Decisions.

SEC Regulatory Updates

SEC Establishes Financial Reporting and Accounting Unit in Enforcement Division

On August 5, the SEC announced it is establishing a new specialized unit within the Division of Enforcement to provide the dedicated expertise, focus, and capacity to pursue accounting and financial reporting fraud cases as well as general misconduct in the accounting and auditing areas. The Financial Reporting and Accounting Unit will work in close collaboration with staff across all relevant SEC divisions and offices to ensure its approach to enforcing federal securities laws is consistent with the Commission’s policy goals.

The unit will be led by Timothy Zimmerman, who joined the SEC’s Division of Enforcement in May 2026 as a senior advisor to the Director. Prior to joining the agency, Mr. Zimmerman worked for 12 years at an international law firm, and most recently served as Deputy General Counsel at an international accounting and professional services firm. 

The Financial Reporting and Accounting Unit will be staffed by both attorneys and accountants with specialized skills related to financial reporting, accounting, and auditing in securities regulation.

SEC Proposes “Regulation Crypto Assets”

On August 18, the SEC proposed new rules that would create a tailored offering framework for certain crypto asset investment contracts, defined as “covered investment contracts.” The proposal, “Regulation Crypto Assets,” would add two Securities Act registration exemptions: (1) a one-time startup exemption for offerings of up to $5 million during a period of up to four years and (2) a fundraising exemption with two tiers of offering limits over a 12-month period.

The proposed rules also include a conditional safe harbor from the term “investment contract” in the definition of “security” under existing requirements. Further, the proposed rules would preempt state securities law registration and qualification requirements with respect to offers and sales of covered investment contracts.

Comments are due 60 days after the proposal is published in the Federal Register.

Other Regulatory Updates

Center for Audit Quality (CAQ)

The CAQ SEC Regulations Committee and its International Practices Task Force discussed recent inflation data for certain countries at its May 2026 meeting. In its July 2026 discussion document, it was noted that seven countries no longer have a three-year cumulative inflation rate exceeding 100% in the most recent annual period reported.

The three-year cumulative inflation rates of Burundi, Myanmar and Sierra Leone were between 70% and 100% in the last calendar year. The three-year cumulative inflation rates of Ethiopia, Ghana, the Lao People’s Democratic Republic and Suriname were below 70%, and therefore, these countries were not included in any of the discussion categories. The discussion document also includes a list of countries whose three-year cumulative inflation rates continue to exceed 100% in the most recent annual period reported.

Given global inflation trends, entities with foreign operations should continue monitoring inflation in countries in which they operate that have high inflation levels. Accounting Standards Codification 830, Foreign Currency Matters, requires a foreign entity in a highly inflationary economy to remeasure its financial statements using its parent’s reporting currency, as of the beginning of the reporting period, including interim reporting periods, following the period in which the economy becomes highly inflationary. An economy is considered highly inflationary when it has a cumulative inflation rate of approximately 100% or more over a three-year period.