FASB updates disclosure requirements in response to SEC

The Financial Accounting Standards Board issued an accounting standards update that incorporates some of the Securities and Exchange Commission's disclosure requirements into FASB's Accounting Standards Codification. The amendments in the update, which FASB issued Monday, aim to clarify or improve the disclosure and presentation requirements of different topics in the codification so users can compare entities subject to the SEC's existing disclosures more easily with those entities that weren't previously subject to the rules, and align the requirements in the Codification with the SEC's regulations. 

In an SEC release on disclosure update and simplification in 2018, the SEC referred to some of its disclosure requirements that overlap with, but require incremental information, to U.S. GAAP to the FASB for potential incorporation into the Codification. The amendments were intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. The amendments were part of an initiative by the SEC's Division of Corporation Finance to review the disclosure requirements for issuers and consider ways to improve the requirements for the benefit of both investors and issuers.

The ASU incorporates into the Codification 14 of the 27 disclosures referred by the SEC. They modify the disclosure or presentation requirements of a variety of topics in the Codification. The requirements are comparatively narrow in scope. Some amendments represent clarifications to, or technical corrections of, the current requirements. Because of the variety of topics amended, a broad range of entities may be affected by one or more of those amendments.

Courtesy of GASB

For entities that are subject to the SEC's existing disclosure requirements and for those entities that are required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that aren't subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, however, the amendments will take effect two years later. However, if by June 30, 2027, the SEC hasn't removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.