This Financial Reporting Update highlights key developments and issues that are relevant to Finance and Accounting Professionals.
Financial Accounting Standards Board
The FASB recently published two ASUs: one addresses identifying the accounting acquirer when a business is acquired in a transaction achieved by exchanging equity interests (ASCs 805 and 810), and another addresses share-based considerations payable to a customer (ASCs 606 and 718). Additionally, the FASB issued a proposed ASU regarding debt exchange transactions (ASCs 470-50 and 405-20) and accepted public comment. For more information on these ASUs, read our recent post to see how this could affect future business combinations.
Securities and Exchange Commission
On June 26, 2025, the SEC’s Division of Economic and Risk Analysis (DERA) published new reports and data on broker-dealers, business development companies (BDCs), and mergers and acquisitions (M&A). The broker-dealer activity report provides information on registered broker-dealers, including an analysis of the industry, the structure of activities of different types of broker-dealers, and their revenues and expenses over the period 2010-2024. The business development company data report provides data extracted from disclosures filed by BDCs with the SEC, including a schedule of investments and detailed financial and non-financial data sets. Lastly, the merger and acquisitions activity report provides a recent analysis of the U.S. mergers and acquisitions market, including the characteristics of a typical deal and the geographic location of the acquirers and targets. The analysis shows that years with favorable market performance were generally associated with higher M&A volume. For more information on M&A activity and how companies can be ready, read our recent blog post on sell-side M&A readiness.
Public Company Accounting Oversight Board
On May 21, 2025, the PCAOB released a new publication, “Audit Focus: Auditing Accounting Estimates,” that provides auditors with good practices about accounting estimates such as key reminders for auditors from the PCAOB related to auditing accounting estimates, staff’s perspectives on common deficiencies in auditors’ work, and procedures that audit firms have currently implemented in this area. Accounting estimates, such as impairments of long-lived assets or allowances for credit losses, generally involve subjective assumptions and measurement uncertainty. They are one of the greatest audit risk areas as they involve complex processes, are pervasive in financial statements, and can substantially affect a company’s financial position. The PCAOB continues to identify deficiencies related to auditors’ testing of accounting estimates, such as not identifying the significant assumptions used by a company to determine an accounting estimate.
American Institute of Certified Public Accountants
On April 29, 2025, the that would defund the Public Company Accounting Oversight Board (PCAOB). The House of Representatives’ Financial Services Committee released draft language that would defund the PCAOB and transfer its duties back to the Securities and Exchange Commission (SEC). However, on June 20, 2025, the Senate parliamentarian’s office ruled that it is not permissible to defund the PCAOB nor transfer its duties to the SEC. Before the ruling, the AICPA leadership had stated that they were committed to supporting the drivers of audit quality needed to safeguard public investing and provide confidence in the markets and were ready to assist policymakers as they consider changes to the PCAOB. The role of the Senate parliamentarian’s office is to determine whether policy provisions, like the PCAOB plan, qualify for the budget reconciliation process after a bill passes the House. In this instance, the office ruled that the PCAOB provision does not qualify as it proposes a policy change rather than a budget change, making it subject to the Byrd rule that would require 60 votes to pass in the Senate. As the PCAOB remains active, firms auditing public companies will continue to abide by their rules and regulations but should diligently monitor the situation to ensure continued compliance.