CPAJ News Briefs: FASB, AICPA - The CPA Journal

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FASB has issued new guidance aimed at enhancing the transparency and clarity of corporate expense reporting, in a move that could significantly impact how public companies disclose financial information. The board issued Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public companies to provide more detailed and organized disclosures of their expenses in their income statements. This means breaking down expenses into specific categories, such as purchases of inventory, employee compensation, and costs related to depreciation and amortization, and presenting them in a clear, tabular format. The goal of the guidelines is to give investors a better understanding of a company’s financial health and help them predict future financial performance more accurately, FASB said. The changes are focused solely on disclosure, meaning companies won’t have to alter their income statement preparation, just how they report the details. “We heard time and again from investors that additional expense detail is fundamental to understanding the performance of an entity and we believe that this standard is a practical way of providing that detail,” FASB Chair Richard Jones said in a statement.

FASB’s taxonomy staff has released two proposals for public comment, aimed at improving the 2025 GAAP Financial Reporting Taxonomy (GRT) Reference Project, and the 2025 Meta Model Relationships Taxonomy. The GRT is a system that standardizes the electronic reporting of financial information, ensuring consistency and comparability across companies’ financial statements. The GRT “Reference Project” focuses on improving the references within the GRT, which refer to the links and connections between the taxonomy elements and the relevant accounting standards or reporting requirements. The Meta Model Relationships Taxonomy, on the other hand, refers to the structure and relationships within the taxonomy itself, which affects how data is organized and interpreted. The first proposal seeks to enhance the 2025 GRT by refining references, adding new elements, and deprecating outdated ones. The proposed changes aim to reduce inconsistencies and enhance the intended use of taxonomy elements. Key improvements include the addition of reference roles to assist in understanding how elements relate to reporting requirements and identifying which elements meet disclosure requirements. The improvements cover various FASB Accounting Standards Codification topics, such as presentation of financial statements, business combinations, and financial services. The project resulted in improvements to 2,456 elements, with 5,560 reference additions and 1,282 deletions.

The AICPA’s Auditing Standards Board (ASB) devoted much of its recent meeting to discussing a standards-setting project on sustainability assurance. According to the board’s workplan, two proposals on environmental, social, and governance (ESG) attestations are being planned for the second quarter of 2025: one is for baseline attestation standards, and the other is for sustainability subject matter section. The ASB is considering revisions to the attestation standards to provide requirements and guidance for practitioners reporting on sustainability information. One of the AICPA’s goals is to converge with international standards whenever possible, and the International Auditing and Assurance Standards Board (IAASB) in September voted to finalize International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. The IAASB expects to publish the final standard in December and plans to publish application materials in January 2025.