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Bridging the GAAP: September 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

September 3, 2025 Meeting

The Board discussed feedback received on the proposed Accounting Standards Update, Debt—Modifications and Extinguishments (Subtopic 470-50) and Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Accounting for Debt Exchanges. As it relates to determining whether a contemporaneous exchange of debt instruments is accounted for as the issuance of a new debt obligation and an extinguishment of the existing debt obligation, the Board decided to affirm:

1. That the conditions apply to exchanges of debt instruments if the new debt obligation has multiple creditors
2. The condition that the existing debt obligation has been repaid in accordance with its contractual terms or repurchased at market terms
3. The condition that the new debt obligation was issued at market terms
4. That the proposed amendments would be required, not optional.

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

The Board also discussed the post-implementation review (PIR) activities completed on Topic 842 and the status of the Leases PIR process; however, the Board made no decisions.

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

FASB Modernizes Guidance on Accounting for Internal Use Software

The FASB issued an Accounting Standards Update that clarifies and modernizes the accounting for costs related to internal-use software in Accounting Standards Codification 350-40, Intangibles – Goodwill and Other – Internal-Use Software. The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40 to align better with current software development methods, such as agile programming. An entity would be required to start capitalizing software costs when both of the following occur:

1. Management has authorized and committed to funding the software project.
2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”).

EITF Updates

Emerging Issues Task Force

September 9, 2025 Meeting

The EITF recommended that the Board add a project to its technical agenda to address the application of Topic 715, Compensation—Retirement Benefits, to certain market-return cash balance plans. For certain cash balance plans, the EITF recommended that when measuring the benefit obligation under the existing defined benefit accounting model in Subtopic 715-30, the discount rate should be equal to the assumed interest crediting rate. The Board will discuss this issue at a public Board meeting to determine whether to add a project to the FASB’s technical agenda.

For more information, see the EITF’s Meeting Summary.

SEC Regulatory Updates

Securities and Exchange Commission

SEC Updates Financial Reporting Manual

On August 28, the SEC’s Division of Corporation Finance published an update to the Financial Reporting Manual (FRM). The updates reflect revisions related to the 2021 amendments to MD&A, selected financial data, and supplementary financial information, recent standards issued by the PCAOB, and the 2020 amendments to Regulation S-X related to acquisitions and dispositions of businesses (including foreign businesses and foreign private issuers). A summary of the recent changes to the FRM is available on the SEC’s Financial Reporting Manual page.

Updated SEC Regulatory Agenda

The SEC’s updated regulatory agenda outlines several proposed and final rules the agency plans to consider in 2025 and 2026, with a focus on facilitating capital formation and reducing compliance burdens. The agenda includes proposals on clarifying the regulatory framework for crypto assets, enhancing accommodations for emerging growth companies and simplifying filer status. It also includes proposals on modernizing disclosures and facilitating disclosure of material information.

James Moloney Named Director of Division of Corporation Finance

The SEC announced that Mr. James Moloney has been named Director of the agency’s Division of Corporation Finance, effective next month. Mr. Moloney previously served at the SEC from 1994 to 2000 as an attorney-advisor and later a special counsel in the Office of Mergers & Acquisitions in the Division of Corporation Finance. Cicely LaMothe, who has served as Acting Director, will return to her role as a Deputy Director of the Division.

SEC Staff Publishes New Guidance on Accelerated Filer Status Determination for Certain SRCs

The SEC staff published a compliance and disclosure interpretation (C&DI) to note that a registrant that qualified as a smaller reporting company (SRC) based on the two-part revenue and public float test, and therefore was a non-accelerated filer, will remain a non-accelerated filer for filings due in the year after losing SRC status. As a result, the registrant does not need auditor attestation under Section 404(b) of the Sarbanes-Oxley Act for the year SRC status was lost and can file its periodic reports that are due in the next year by the non-accelerated filer deadlines. However, the registrant will not be eligible for SRC accommodations (e.g., scaled disclosure requirements) beginning with its Form 10-Q for the first fiscal quarter of the year after losing SRC status.

For example, a calendar-year registrant with historical annual revenue of less than $100 million and a public float of less than $700 million has previously qualified as an SRC and non-accelerated filer. As of 30 June 2025, the registrant’s public float rose above $700 million, so it will no longer qualify as an SRC and is required to begin providing non-scaled, larger-company disclosures in its Form 10-Q for the first fiscal quarter of 2026. On 31 December 2025, the registrant assesses its filer status. Based on the C&DI, it retains non-accelerated filer status, despite its public float, because it previously qualified as an SRC based on both revenue and public float. The registrant will remain a non-accelerated filer for filings due in 2026 and will not need auditor attestation under Section 404(b) for 2025.

This C&DI does not apply to registrants that qualified as SRCs based on the public float test only. Registrants should engage with legal counsel when considering the applicability of this C&DI to their facts and circumstances.

SEC Extends Compliance Date for Form PF Amendments

The SEC and US Commodity Futures Trading Commission (CFTC) extended the compliance date for amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds, from October 1, 2025 to October 1, 2026. This third extension is intended to provide additional time for the SEC and CFTC to complete their reviews of the amendments in accordance with the January 2025 Presidential Memorandum related to regulatory actions by executive departments and agencies.

Court Pauses SEC Climate Disclosure Rules Litigation

On September 12, the US Court of Appeals for the Eighth Circuit paused its consideration of legal challenges to the SEC’s climate-related disclosure rules, pending further action by the SEC. The SEC had previously communicated to the Court that it did not intend to review or reconsider the rules and asked the Court to decide the case before the SEC commits to a course of action.

The Court’s order highlighted that “it is the [SEC’s] responsibility to determine whether its Final Rules will be rescinded, repealed, modified or defended in litigation,” effectively sending the matter back to the SEC to determine whether it will defend, amend, or withdraw the rules.

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