The FASB has 14 open agenda requests it is currently fielding, including one asking for a two-year deferral for private companies of the lease accounting standard, according to the board’s Sept. 22, 2021, meeting.
“Stakeholders put a lot of effort into both requesting items as well as researching them and doing outreach on these items, that’s why they don’t simply show up in front of our board the day that they’re submitted,” FASB Chair Richard Jones said. “Even though it may seem that seven board members didn’t want something, that’s [not in response to] the quality of the submission,” he said
Topic 842, Leases, took effect for public companies in 2019, and was deferred last year to 2022 for private companies. The standard requires the full magnitude of a company’s long-term lease obligations to be reported on the balance sheet.
The board also got a request to clarify rules in Topic 842 related to the application of the sale and leaseback guidance for specific fact patterns, a FASB staff member said.
And another agenda requests came in relation to Topic 326, Credit Losses, asking the board to extend the CARES Act amendments for troubled debt restructuring guidance (TDR), a topic related to the board’s current project on TDR accounting for creditors.
The board is currently conducting post-implementation reviews (PIRs) of both Topic 842 and Topic 326 – its process to determine whether a standard worked as intended: to provide investors with useful information at low cost to financial statement preparers.
FASB staff is still in the process of evaluating those requests as part of their overall PIR and aim to bring the requests to the board at a future PIR-focused meeting.
“The board has added numerous projects for issues that have been raised as part of the leasing PIR as well as the CECL PIR so those items will be subject to the same assessment as to whether they meet the board’s agenda decision criteria,” staff said.
The topics were not submitted to the board in response to its June Invitation to Comment (ITC) No. 2021-004, Agenda Consultation, which has generated another batch of requests, staff said. The comment deadline on the ITC ended on Sept. 22.
Specifically in response to the ITC, the board received “a few request” related to the accounting for digital assets as well as a request to expand the scope of the fair value option on Topic 825, Financial Instruments, to include commodity inventories and executory contracts related to physical commodities, staff said.
The board also received a request to require more disaggregated credit and services disclosures by entities that enter into banking services – issues still being researched in connection with evaluating the overall feedback of the agenda consultation process. The topics will be addressed at a future meeting.
Other topics the board plans to consider relate to whether private companies should account for profits interest as a share based payment or as deferred compensation, staff said. The issue and its interrelationship with partnership accounting is being researched by the Private Company Council (PCC), the panel that works with the board to address GAAP modifications for private companies. The topic will be addressed at the next PCC meeting.
Lastly, the board has an open request related to employee benefit plan accounting, which highlights various aspects of the accounting for defined benefit pension plans and defined contribution plans, staff said. The issues raised relate to areas where a submitter observed accounting diversity in practice.
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