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Bridging the GAAP: February 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)

January 14, 2026 Meeting

The Board added a project to its technical agenda to address the discount rate used to measure the projected benefit obligation under ASC 715, Compensation – Retirement Benefits, for market-return cash balance plans. The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. The Board also decided on a 60-day comment period for the proposed Update.

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

January 28, 2026 Meeting

The Board discussed feedback received in response to the 2025 Invitation to Comment, Agenda Consultation. The Board directed the staff to perform additional research with the objective of harmonizing the variable interest entity (VIE) and voting interest entity (VOE) models to streamline VIE/VOE determination and eliminate unnecessary differences. The scope of this research also will involve pursuing potential improvements to the VIE disclosures.

The Board also added a project to its technical agenda to clarify GAAP by providing a definition of the term “common control” based on existing practice for certain areas of the Codification.

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

February 4, 2026 Meeting

The Board discussed feedback received in response to the 2025 Invitation to Comment, Agenda Consultation. The Board directed the staff to perform additional research with the objective of simplifying the subsequent accounting for goodwill by (1) requiring impairment testing only upon a triggering event and (2) allowing goodwill to be tested for impairment at the operating segment level. 

The Board added a project to its technical agenda to improve the accounting for certain tangible commodities inventories.

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

Upcoming February 25, 2026 Meeting

The Board will discuss (a) a summary of the feedback received on risk management and hedge accounting in response to the 2025 Invitation to Comment, Agenda Consultation, and agenda requests and (b) the staff’s plan for addressing that feedback through a series of potential projects. In addition, the Board will determine whether to add a project to its technical agenda on targeted hedge accounting improvements and begin initial deliberations.

American Institute of Certified Public Accountants (AICPA)

Draft Updates to AICPA Equity Valuation Guide

On January 15, the AICPA’s Financial Reporting Executive Committee has released for comment a working draft of its Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Private companies should consider the draft updated guidance when valuing equity securities issued as compensation. While the guide is not authoritative, the revisions reflect what the AICPA’s Equity Securities Task Force views as best practices.

The working draft includes updates to chapter 6, Valuation of Equity Securities in Complex Capital Structures, which may have significant implications on valuations for financial reporting purposes. It also includes updates to chapter 8, Inferring Value from Transactions in a Private Company’s Securities, and chapter 9, Selected Accounting and Disclosure Matters, which were previously released for comment in June 2024.

Comments on the working draft are due by June 1, 2026.

International Accounting Standards Board

IASB Proposes Amendments to Fair Value Option for Certain Investments

On February 19, the IASB issued an exposure draft proposing narrow-scope amendments to clarify that an entity that has a main business activity of investing in particular types of assets (as set out in paragraph 49(a) of IFRS 18) is eligible to elect the fair value option in IAS 28 Investments in Associates and Joint Ventures. The proposed amendments aim to improve consistency in application and provide clarity ahead of the effective date of IFRS 18 Presentation and Disclosure in Financial Statements.

Comments are due by April 20, 2026.

SEC Regulatory Updates

SEC Proposes Amendments to Small Entity Definitions

On January 7, the SEC issued a proposed rule amending the definitions of “small business” and “small organization” for registered investment companies, investment advisers, and business development companies for purposes of the Regulatory Flexibility Act. The proposal would raise the small entity thresholds for investment companies and advisers. It is designed to help the SEC better tailor its analyses to address the specific regulatory challenges that these small entities face so it can consider adapting its rulemaking accordingly. Additional information may be found on the SEC’s website. Comments are due by March 13, 2026.

SEC Staff Issues Statement on Tokenized Securities

On January 28, the SEC’s Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets issued a joint statement to provide their views on tokenized securities. A tokenized security, as defined in the statement, is a financial instrument that meets the definition of “security” under the federal securities laws that is formatted as or represented by a crypto asset and for which the record of ownership is maintained in whole or in part on or through one or more crypto networks (e.g., blockchain or similar distributed ledger technology). The statement notes that tokenized securities generally fall into two categories: (1) securities tokenized by or on behalf of the issuers of such securities, and (2) third party-sponsored tokenized securities. The statement provides views on the application of federal securities laws to tokenized securities based on the model of tokenization, terms of structure, and rights of the holders.

SEC Proposes Amendments to Form N-PORT and Extends “Names Rule” Deadlines

On February 18, the SEC proposed amendments to Form N-PORT, the report used by certain registered investment companies to file monthly portfolio holdings with the SEC. The proposed amendments would:

• Extend the filing deadline from 30 to 45 days after month end;
• Restore the quarterly publication frequency that was in effect prior to 2024 amendments;
• Reduce reporting burdens by streamlining or eliminating certain information; and
• Add new reporting requirements for funds with ETF share classes.

Comments are due 60 days following publication in the Federal Register.

Additionally, the SEC extended the compliance dates for Form N-PORT reporting requirements related to the “Names Rule” to November 17, 2027 for fund groups with net assets of $10 billion or more and to May 18, 2028 for fund groups with less than $10 billion.

Other Regulatory Updates

European Commission

On January 8, the European Commission posted final amendments related to the EU Taxonomy Regulation in the Official Journal. The amendments will enter into force on January 28. The provisions may be applied to reports issued on or after January 1, 2026. Entities with fiscal years beginning in 2025 may elect not to apply the amendments. 

The amendments are part of the Omnibus package of improvements and are intended to reduce administrative burden, improve the accuracy of key performance indicators (KPIs), and shorten and simplify the mandated reporting templates. They also permit financial entities to delay compliance with the EU Taxonomy Regulation for two years as long as they do not assert that they have sustainable activities. 

California Air Resources Board (CARB)

On January 13, the CARB posted preliminary draft regulatory proposal documents that would amend existing regulations applicable to certain California electricity generators, industrial facilities, fuel suppliers, and electricity importers under the AB 32 Global Warming Solutions Act of 2006.

The draft proposal documents relate to the California Cap-and-Invest (formerly the Cap-and-Trade) Regulation. The proposed amendments are intended to reflect recent legislative changes that extend the program through 2045 and build on ongoing regulatory updates initiated in 2023. CARB also posted draft proposal documents related to the Mandatory Greenhouse Gas Reporting Regulation (MRR), which supports data and compliance requirements of the Cap-and-Invest program. 

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 November 2025 meeting and issued a discussion document in January 2026 noting that Egypt no longer has a three-year cumulative inflation rate exceeding 100% in the most recent annual period reported. Egypt’s three‑year cumulative inflation rate was between 70% and 100% in the last calendar year. The discussion document also includes a list of countries whose three-year cumulative inflation rate continues to exceed 100% in the most recent annual period reported.

ASC 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.

Given global inflation trends, entities with foreign operations should continue monitoring inflation in countries in which they operate that have high levels of inflation.

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