This Financial Reporting Update highlights key developments and issues that are relevant to Finance and Accounting Professionals.
Financial Accounting Standards Board
On March 16, 2026, the Private Company Council (PCC) issued their 2025 Annual Report, highlighting its accomplishments and activities. The PCC was initially established in 2012 to work with the Financial Accounting Standards Board (FASB) to improve the process for setting accounting standards for private companies that follow GAAP. The report highlighted key areas of progress, including the completed project for the Measurement of Credit Losses for Accounts Receivable and Contract Assets. This project resulted in the issuance of the ASU 2025-05, which aims to reduce the cost and complexity of applying Topic 326 to these current assets, which can be particularly challenging for private companies. Additionally, the report highlighted the project for the Presentation and Disclosure of Retainage for Construction Contractors, which resulted in a released FASB staff educational paper to clarify the application of the revenue recognition guidance on the presentation and disclosure of retainage for construction contractors.
Securities and Exchange Commission
On January 9, 2026, the Securities and Exchange Commission (SEC) proposed amendments to the rules that define which registered investment companies, investment advisors, and business development companies qualify as small entities for the Regulatory Flexibility Act (RFA). The RFA requires federal agencies to conduct analyses that minimize the impact of federal rulemaking on small entities. These amendments would raise the small entity threshold for investment companies and advisors in order to help the SEC more accurately capture the types and numbers of investment advisors that are small. Specifically, they will increase the asset-based thresholds under which investment companies and investment advisors are deemed small entities, update the way that related funds’ assets are aggregated for purposes of defining small entities, and provide inflation adjustments to asset-based thresholds by order every 10 years. This aligns with the SEC’s goals of minimizing the significant economic impact on small entities and modernizing regulatory requirements.
Public Company Accounting Oversight Board
On March 31, 2026, the Public Company Accounting Oversight Board (PCAOB) issued a request for public comment on its strategic priorities for their 2026-2030 Strategic Plan. This Plan will outline the PCAOB’s goals and objectives for protecting investors and the public interest in the preparation of informative, accurate, and independent audit reports, as well as set the budget for each year in the plan. The PCAOB requested feedback on several areas including what the PCAOB should focus on over the next 5 years, what changes they should make to their inspections program, what inspection information would be most useful to stakeholders, what standard-setting projects they should pursue, how they can align their auditing standards with international auditing standards, how AI can help their objectives, and how they can enhance transparency with its stakeholders. The deadline for public comment is May 15, 2026.
American Institute of Certified Public Accountants
On February 1, 2026, the American Institute of Certified Public Accountants (AICPA) posted an article discussing how AI is transforming the audit and what it means for CPAs. Auditors are already using generative AI tools for basic audit tasks such as reading and summarizing contracts, writing communications, processing large volumes of supporting documents and summarizing the most relevant information for audit workpapers, and creating data visualizations. However, firms are taking an extra step and are investing in specialized generative AI audit tools designed to support specific audit functions, such as Caseware’s AiDA, a digital assistant to help streamline workflows, ensure compliance, and provide context-aware responses. Caseware is also working with the AICPA on the Dynamic Audit Solution (DAS), a cloud-based audit platform that integrates real-time data ingestion, analytics-driven risk assessment, adaptive workflows, and automation to streamline the audit process. While Generative AI platforms like these are being utilized, the AICPA notes that Agentic AI is the next step in AI capabilities for auditors, where Agentic AI can perform advanced audit tasks such as compliance workflows, reconciling the general ledger, subledgers, and bank feeds, and continuous monitoring of systems to detect duplicate payments and control failures.
On February 26, 2026, the AICPA Auditing Standards Board (ASB) published The Exposure Draft, Proposed Statement on Standards for Attestation Engagements, Common Concepts, Examination Engagements, Review Engagements, and Engagements to Report on Sustainability Information. This draft proposal reflects the ongoing evolution in attestation services, such as an increase in requests for services beyond audits of financial statements, such as sustainability, digital assets, cybersecurity, governance, and related controls. The draft consists of the following two main parts: updates to the baseline attestation standards to address evolving practice, and two new AT-C sections related to engagements to report on sustainability information. The adoption of these updates is expected to occur next year after further deliberation by the ASB and would become effective for engagements beginning on or after June 15, 2029.
On March 2, 2026, the AICPA Auditing Standards Board (ASB), released their 2026-2027 work plan, mapping out their public-interest focused projects for the year. Some of the major projects in the work plan include a new ASU that addresses strengthening and clarifying the auditor’s responsibilities when fraud or suspected fraud is identified, proposed requirements and guidance related to confirmation procedures in financial statement audits, potential amendments to the existing going concern standards, and potential guidance to encourage the effective and appropriate use of generative AI, agentic AI, and data analytics to promote audit quality. They also released their 2026-2030 Strategic Priorities Plan with various objectives including developing high-quality standards in public interest, enhancing communications with stakeholders, operating strategically, keeping standards relevant in a changing environment, and supporting the effective implementation and application of standards. In addition to the plans, the ASB will continue to monitor relevant standard setting activities of the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB) for consideration of new projects.