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Bridging the GAAP: February 2025

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

FASB Standard Setter Updates

Financial Accounting Standards Board

FASB Requests Feedback on Future Agenda Priorities

On January 3, the FASB published an Invitation to Comment that gives stakeholders the opportunity to provide feedback on its future standard setting agenda. Comments are due by June 30.

FASB Clarifies Interim Effective Date for New “DISE” Standard

The FASB issued Accounting Standards Update (ASU) 2025-01 to clarify the interim effective date of its new standard requiring public business entities to disclose disaggregated information about certain income statement expense line items. The standard is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027.

FASB Proposes Codification Improvements 

On January 22, the FASB issued a proposed ASU of targeted improvements to the Codification covering a broad range of topics such as earnings per share, beneficial interests, transfers of receivables from contracts with customers, and accounting for certain receivables by not-for-profit entities. The proposed amendments would apply to all reporting entities within the scope of the affected accounting guidance. Comments are due by April 22.

February 5, 2025 Meeting

The Board discussed feedback received on the proposed Accounting Standards Update, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer.  The Board affirmed the following decisions:

• The definition of the term performance condition for share-based consideration payable to a customer should be revised to explicitly incorporate conditions that relate to achieving a specified performance target that is defined by reference to the grantee’s purchases of goods or services from the grantor.
• The definition of the term performance condition should include performance targets based on purchases by parties that purchase the grantor’s goods or services from its customer.
• The entity-wide policy election permitting an entity to account for forfeitures as they occur should be eliminated for any remaining customer awards that would continue to have service conditions.
• The variable consideration constraint in Topic 606 should not apply to share-based consideration payable to customers either before or after the grant date.

The Board also decided to not permit a grantor to make a one-time change to its forfeitures election for nonemployee awards upon the adoption of the amendments. Further, the Board decided that the amendments will be effective for annual reporting periods (including interim periods within annual reporting periods) beginning after December 15, 2026, for all entities. The Board also decided to permit early adoption for both interim and annual financial statements that have not yet been issued (or been made available for issuance). The Board clarified that if an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim period.

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.

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

AICPA Updates

American Institute of Certified Public Accountants

AICPA Updates Practice Aid for Digital Assets

The AICPA updated its practice aid on the accounting and auditing of digital assets with new guidance to address the FASB’s accounting standards update (ASU 2023-08, Accounting for and Disclosure of Crypto Assets) on the accounting for and disclosure of certain crypto assets.

AICPA Requests Feedback on Segment Reporting Update of Broker Dealer Guide

The proposed enhancive update to the AICPA Broker Dealer guide related to segment reporting is available for public comment. The AICPA’s Financial Reporting Executive Committee (FinREC) is requesting feedback on a proposed update to the AICPA accounting guide, Brokers and Dealers in Securities, related to the implementation of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. Comments are due by March 24.

IFRS Foundation Updates

International Financial Reporting Standards

IFRS Foundation Publishes Implementation Guide on Disclosing Only Climate-Related Information 

On January 30, the IFRS Foundation published a new guide, Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2, to help companies that disclose information on only climate-related risks and opportunities using transition relief for adoption of the ISSB’s inaugural standards, IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, Climate-related Disclosures. That “climate-first” relief was afforded based on stakeholder feedback about the need for climate-related disclosures but concerns about data availability and readiness to provide information about other sustainability-related risks and opportunities.

SEC Regulatory Updates

Securities and Exchange Commission

SAB 122 Becomes Effective; Rescinds SAB 121

The SEC staff released Staff Accounting Bulletin No. 122 (SAB 122) which rescinds the interpretive guidance in SAB 121 for reporting entities that have an obligation to safeguard customers’ crypto assets. On January 30, the SAB topic was published in the Federal Register and is effective for annual periods beginning after December 15, 2024. The interpretive guidance is required to be applied retrospectively to all prior periods. Upon adoption, reporting entities should include disclosure of the effects of the change in accounting principle in accordance with ASC 250, Accounting Changes and Error Corrections.

Early adoption is also permitted which means that reporting entities that have not filed (or issued) their financial statements and early adopt SAB 122 would not include the safeguarding liability and corresponding asset (or any of the SAB 121 required disclosures) in their 2024 financial statements. An entity that has a safeguarding obligation should assess whether it has any loss contingencies under ASC 450, Contingencies. SAB 122 does not affect the guidance in ASC 350-60 related to accounting and disclosures for certain crypto assets.  

Acting SEC Chairman Mark Uyeda Requests Pause of Court Proceedings on Climate-Related Disclosure Rules

On February 11, SEC Acting Chairman Mark Uyeda issued a statement announcing his decision to direct SEC staff to ask the US Court of Appeals for the Eighth Circuit to not schedule for argument the case on the SEC’s climate‑related disclosure rules. Mr. Uyeda said this would allow the SEC to determine the appropriate next steps, considering the recent change in the SEC’s composition and the recent presidential memorandum regarding a regulatory freeze.

The disclosure rules, which would require registrants to include certain climate‑related information in their registration statements and annual reports, were voluntarily stayed by the SEC in April 2024 pending the court’s judicial review of the consolidated challenges to the rules.

Other Regulatory Updates

Agency Seeks Input on Implementation of California’s Climate Disclosure Laws

The California Air Resources Board (CARB) has issued a request for input to inform its development of regulations implementing the laws referred to as “SB 253” and “SB 261” (from their Senate Bill numbers). SB 253 and SB 261 require certain entities doing business in California to disclose greenhouse gas emissions and climate-related risks, respectively. CARB has asked respondents to address specific questions regarding scope, interoperability, assurance, and other areas relating to implementation. The comment deadline is March 21.

Rikki Williams

Senior Director | CPA

Rikki is a Senior Director at Centri Business Consulting. He has more than 18 years of public and private accounting experience. View Rikki Williams's Full Bio