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Bridging the GAAP: October 2023

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

October 4, 2023 Meeting

The Board ratified the consensus-for-exposure reached by the Emerging Issues Task Force on induced conversions of convertible debt instruments (Issue No. 23‑A) and directed the staff to draft a proposed Accounting Standards Update (ASU). It also discussed its project on Codification improvements: amendments to remove references to the Concepts Statements.

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

October 11, 2023 Meeting

The Board discussed comment letter feedback on proposed amendments related to two issues included in the 2019 proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Codification Improvements to Hedge Accounting—Dual Hedging Relationships and Use of the Term Prepayable in the Shortcut Method. The Board also discussed a third issue that arose as a result of the cessation of LIBOR—Net Written Options as Hedging Instruments.

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

FASB Roundtable on Post-Implementation Review of ASC 606

The FASB will host a public roundtable on its post-implementation review of ASC 606, Revenue from Contracts with Customers, on November 10, 2023 at 10 a.m. ET. The purpose of the roundtable is to solicit feedback from those who have experience implementing Topic 606 to assist the FASB in its review of the standard. Roundtable participants, including investors and other financial statement users, preparers, auditors, and others across all industries, will share their insights on the process of implementing Topic 606, technical issues identified during that process, and other topics that will assist in the evaluation of the benefits of Topic 606 and related costs.

For more information, see the FASB’s Media Advisory.

FASB Roundtable on the Proposal on Disaggregation of Income Statement Expenses

The FASB will host a public roundtable on its proposed ASU on the disaggregation of income statement expenses (DISE) on December 13, 2023. The purpose of the roundtable is to provide an opportunity for those who have submitted a comment letter or provided feedback on the proposed ASU (which would apply to public business entities) to discuss their feedback with the FASB. The Board is seeking participation from investors, preparers, auditors, and others across all industries.

For more information, see the FASB’s Media Advisory.

IASB Standard Setter Updates

International Accounting Standards Board

September IFRIC Update

The IFRIC Update summarizes the issues discussed at the IFRS Interpretations Committee’s September 2023 meeting.

SEC Regulatory Updates

Security and Exchange Commission

Amendment of “Names” Rules for Funds

The SEC adopted amendments to the “names” rule under the Investment Company Act of 1940 to expand the scope of funds that must adopt a policy to invest at least 80% of the value of their assets in accordance with the investment focus that the fund’s name suggests, updating the rule’s notice requirements, and establishing recordkeeping requirements. The SEC is also adopting enhanced prospectus disclosure requirements for terminology used in fund names and additional requirements for funds to report information on Form N-PORT regarding compliance with the names-related regulatory requirements.

New Guidance on Pay vs. Performance Published

Pay versus performance (PvP) rules require disclosure of the relationship between executive compensation and financial performance for the five most recently completed fiscal years in proxy and information statements that are required to include executive compensation disclosures. The SEC published new compliance and disclosure interpretations (C&DIs) on the PvP rules to clarify the following, among other things:

• For purposes of the PvP disclosures, market conditions should be considered in determining whether the vesting conditions of share-based awards have been met (i.e., registrants must include in executive compensation actually paid any change in fair value of awards subject to market conditions until the market conditions are satisfied.)
• To calculate executive compensation actually paid, registrants may use a different valuation technique than the one they used to determine the grant‑date fair value of share-based payments in their US GAAP financial statements, if the other technique provides a better estimate of fair value after the grant date and is permitted under US GAAP.

Amendments to Beneficial Ownership Reporting

The SEC adopted amendments to beneficial ownership reporting requirements for investors that own more than 5% of a covered class of equity securities. The amendments:

• Shorten reporting timelines for investors required to file on Schedule 13D such that initial reporting of the acquisition of a beneficial ownership will now be required in 5 business days (shortened from the current requirement of 10 calendar days), with any material changes to that ownership to be reported through an amendment within 2 business days of the material change; and
• Change the filing timelines for qualified institutional investors and other exempt investors eligible to use Schedule 13G.

The new requirements for Schedule 13D will become effective 90 days after the final rules are published in the Federal Register. Compliance with the new Schedule 13G timelines will be required beginning on September 30, 2024.

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