The Financial Accounting Standards Board (FASB) for years has released one large package of updates to the U.S. generally accepted accounting principles (GAAP) financial reporting taxonomy, typically in the fall.
In 2018, the accounting board shifted gears.
Instead of publishing a single, sweeping update, the board is rolling out proposed and final changes individually, aiming to align changes in the interactive data taxonomy to its standard-setting. The taxonomy is a list of computer readable financial reporting labels coded in eXtensible Business Reporting Language (XBRL). The taxonomy allows analysts, investors and others to electronically search for data in financial statements instead of manually sorting through regulatory filings.
The change became effective on Jan. 1, 2018.
The FASB said, “The past practice of an annual 60-day comment period on the entire taxonomy in the September-October time frame is hereafter replaced by comment periods for the individual proposed taxonomy improvements.”
The FASB in recent months has released three proposed updates to the taxonomy and two final changes.
The board’s research staff on Feb. 23, 2018, issued proposed taxonomy improvements to go along with proposals the FASB released about technical changes to the lease accounting standard and allowing a new benchmark interest rate to be used for hedges of interest rate risk in U.S. GAAP’s hedge accounting guidance.
The FASB had released Proposed Accounting Standards Update (ASU) No. 2018-200, Leases (Topic 842): Targeted Improvements, in January to make it easier for companies and organizations to transition to the board’s sweeping new lease accounting standard. The board in February issued Proposed ASU No. 2018-220, Derivatives and Hedging (Topic 815): Inclusion of the Overnight Index Swap (OIS) Rate Based on the Secured Overnight Financing Rate (SOFR) as a Benchmark Interest Rate for Hedge Accounting Purposes. Comments on the taxonomy improvements for the lease accounting amendments were due on April 7. Comments on the hedge accounting proposal’s taxonomy updates are due on April 22.
On March 2, the staff released proposed taxonomy changes to correspond to the FASB’s Proposed ASU No. 2018-230, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract; Disclosures for Implementation Costs Incurred for Internal-Use Software and Cloud Computing Arrangements — a Consensus of the FASB Emerging Issues Task Force. If proposed change is finalized for U.S. GAAP, companies will be allowed to capitalize certain expenses related to setting up business processes managed with a cloud computing service. Comments on the taxonomy update for the cloud computing proposal are due on April 30.
The FASB’s staff also has issued taxonomy changes to coincide with final updates to U.S. GAAP and to reflect updates in Securities and Exchange Commission (SEC) guidance.
The staff on February 26 published taxonomy updates for ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which the FASB published on Feb. 14 to ease the financial reporting requirements of the Tax Cuts and Jobs Act (TCJA) for banks and insurance companies.
The staff also issued a taxonomy update for changes to U.S. GAAP’s income tax accounting standard that reflect updated SEC interpretive guidance for the tax reform President Donald Trump signed into law in December 2017. The FASB published ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, on March 13 to update the income tax accounting standard to reflect SEC Staff Accounting Bulletin (SAB) No. 118 (Topic 5.EE), Income Tax Accounting Implications of the Tax Cuts and Jobs Act. The interpretive guidance says the SEC permits companies to use “reasonable estimates” and “provisional amounts” for some of their line items for taxes for their fourth-quarter and year-end 2017 financial statements and regulatory filings.
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