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Bridging the GAAP: May 2024

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)

May 8, 2024 Meeting

The Board continued redeliberations on the proposed Accounting Standards Update, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The Board decided to allow an entity to (1) disclose an aggregate reimbursement amount that is either received or paid as a separate line item in the tabular format disclosure or (2) map the reimbursement amount to the required expense categories. The Board also decided to require that an entity disclose a qualitative description of the natural expense categories to which the reimbursement relates.

The Board discussed the post-implementation review (PIR) activities completed since the September 2022 Board meeting on Topic 606, including outreach feedback (including the November 2023 roundtable), academic research, and application issues. The Board made no decisions and asked the staff to continue to monitor the implementation of Topic 606.

The Board also discussed comment letter feedback and issues for redeliberations on Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 6: Measurement.

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

Upcoming FASB Webcast

The Board will provide a semiannual update on standard-setting activities pertaining to private companies and not-for-profit organizations. The webcast, titled FASB Update for Private Companies and Not-for-Profit Organizations, will take place on Monday, June 10, 2024, from 1:00 to 3:05 p.m., Eastern Daylight Time.

For more information about the webcast, please visit the FASB’s website.  

International Accounting Standards Board (IASB)

IFRS Foundation and EFRAG Publish Interoperability Guidance

On May 2, the IFRS Foundation and EFRAG published guidance to illustrate the alignment between the IFRS Sustainability Disclosure Standards and the EU standards. The guidance:

• provides information on the alignment of climate disclosures and how to comply with both sets of standards; and
• describes the alignment of general requirements of the two frameworks (e.g., materiality, presentation and disclosure of non-climate sustainability topics).

Proposed Narrow Scope Amendments for Renewable Electricity Contracts

On May 8, the IASB published an exposure draft proposing narrow-scope amendments that intend to more faithfully reflect the effects of renewable electricity contracts on a company. These contracts are unique as the supply of electricity cannot be guaranteed, but buyers are often required to take and pay for whatever amount of electricity is produced, even if that amount does not match the buyer’s needs at the time of production. The proposed amendments (1) would add disclosure requirements to enable investors to understand the effects of these contracts on a company’s financial performance and future cash flows, (2) would permit hedge accounting if these contracts are used as hedging instruments, and (3) address how the “own-use” requirements apply to these contracts.

Comments are due by August 7.

IASB Issues IFRS 19

On May 9, the IASB issued IFRS 19, Subsidiaries without Public Accountability: Disclosures, which will permit eligible entities to use IFRS Accounting Standards with reduced disclosure requirements. Applying IFRS 19 will reduce the costs of preparing subsidiaries’ financial statements while maintaining the usefulness of the information for users of their financial statements.

Regulatory Updates

Federal Trade Commission

Final Rule on Non-compete Clauses

In late April, the Federal Trade Commission approved a final rule that non-compete clauses are an unfair method of competition. Therefore, after its effective date (which will be 120 days after publication in the Federal Register), non-compete agreements with workers will no longer be enforceable and workers must be notified of this. Existing non-compete agreements with senior executives (as defined) will continue to be enforceable. However, new non-competes cannot be created, except as it relates to non-compete arrangements between buyers and sellers of a business. Companies with intangible assets related to existing employee non-compete agreements that do not meet the exceptions should consider the appropriate useful life for such assets.

Rikki Williams

Senior Director | CPA

Rikki is a Senior Director at Centri Business Consulting. He has more than 16 years of public and private accounting experience. View Rikki Williams's Full Bio