This Financial Reporting Update highlights key developments and issues that are relevant to Finance and Accounting Professionals.

 

Financial Accounting Standards Board

On May 11th, the Financial Accounting Standards Board (FASB) published a proposed Accounting Standards Update (ASU) to improve Generally Accepted Accounting Principles (GAAP). The update would implement guidance to help entities determine if profits interest and similar awards should be accounted for as a share-based payment arrangement within the scope of Topic 718, Compensation – Stock.

Many private businesses provide employees as well as other service providers with profits interest and similar awards to align compensation with the company’s operating performance. This also provides holders with the ability to participate in future profits and/or equity appreciation of the company. As public business entities may also be required to account for profits interest awards, the Private Company Council (PCC) recommended that FASB provide illustrative guidance for all reporting entities that account for profits interest and similar awards.

Stakeholders are able to review and provide comments on the proposed ASU by July 10, 2023.

Securities and Exchange Commission

On May 17th, the Securities and Exchange Commission (SEC) proposed rule changes intended to improve the resilience and recovery and wind-down planning of covered clearing agencies. If implemented, the proposal would modify current rules related to intraday margin and the use of substantive inputs to a covered clearing agency’s risk-based margin system. This proposal would also add a new rule to provide requirements for the contents of a covered clearing agency’s recovery and wind-down plan.

“Today’s proposal would help ensure the continuity of clearing services during times of significant stress,” said SEC Chair Gary Gensler. “Well-regulated and well-managed clearinghouses help lower risk for the public. I am pleased to support the proposal because, if adopted, it would help enhance the resiliency of this part of our market plumbing, which is fundamental for the capital markets to operate. That benefits investors, issuers, and the markets alike.”

The public comment period will be open for 60 days following publication of the proposal on the SEC website or 30 days following publication of the proposal in the Federal Register, whichever period is longer.

Association of International Certified Professional Accountants

On May 24th, the Association of International Certified Professional Accountants announced that Okorie L. Ramsey, CPA, CGMA, PMP, NACD.DC, Vice President, Sarbanes/Oxley for Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals, is the new chair of the American Institute of CPAs (AICPA). He will also serve as chair of the American Institute of Certified Professional Accountants.

Ramsey was elected to the one-year AICPA volunteer post by the organization’s governing Council. Carla McCall, CPA, CGMA, managing partner of Alexander Aronson Finning CPAs, was also voted in as the AICPA’s vice chair.

Ramsey has listed three main areas of focus for his term:

  • Innovation to advance the profession.
  • Instill integrity and trust into sustainability.
  • Support the next generation and give them enhanced opportunities to succeed.

“We are a profession of leaders,” Ramsey stated in his acceptance speech. “And it is our duty to guide people, firms, businesses and economies. Together, we can seize the moment and shape our future.”