This Financial Reporting Update highlights key developments and issues that are relevant to Finance and Accounting Professionals.
Financial Accounting Standards Board
On April 27, 2026, the Financial Accounting Standards Board (FASB) published Accounting Standards Update (ASU) 2026-01, providing authoritative guidance on how an issuer should initially measure paid-in-kind (PIK) dividends on equity-classified preferred stock. The amendments require that PIK dividends on equity-classified preferred stock be initially measured based on the PIK dividend rate stated in the preferred stock agreement. This ASU was issued in response to stakeholder concerns that U.S. GAAP previously lacked explicit guidance on how issuers should initially measure such dividends. By introducing this guidance, this ASU improves the decision-making usefulness of financial reporting information provided to investors by enhancing the comparability of financial information reported among entities that issue PIK dividends on equity-classified preferred stock. Additionally, this ASU provides additional information about the liquidation value of the preferred stock. The amendments in the ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance.
On May 19, 2026, the FASB published ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which aims to improve financial accounting for and the disclosure of activities related to environmental credits and environmental credit obligations. It will provide recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. This is the first formal U.S. GAAP guidance for how companies must recognize, measure, and disclose environmental credits. This update comes in response to stakeholder comments regarding those who expressed the need for information regarding the understandability of financial accounting and reporting information about environmental credits and credit obligations associated with regulatory compliance programs and comparability of that information by reducing diversity in practice. This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2027. For other entities, the effective date is December 15, 2028. Early adoption is permitted.
On June 10, 2026, the FASB issued an additional proposed ASU under Compensation—Retirement Benefits—Defined Benefit Plans – Pension (Subtopic 715-30). This proposed update clarifies that the discount rate should be used to measure the benefit obligation for certain market-return cash balance plans. In these types of plans, the promised benefit to the participant at retirement (or termination) is equal to the principal credits and interest credits, and Stakeholders have noted that there are different interpretations in practice about how the current measurement guidance should be applied and that the accounting may not reflect the economics of these types of plans. By using the discount rate, entities would better reflect the economics of market-return cash balance plans and reduce diversity in practice on how the measurement guidance in Subtopic 715-30 should be applied. The FASB is requesting comments on this proposed ASU which are due August 10, 2026.
On June 17, 2026, the FASB published a proposed ASU that intends to improve accounting guidance for interest rate risk hedging and net investment hedging and is requesting comments. This proposed update is to address three hedge accounting issues that have been identified by stakeholders. The first issue addresses hedging interest rate risk for held-to-maturity (HTM) debt securities and would permit an entity to hedge interest rate risk for HTM debt securities in fair value hedges and cash flow hedges. This would allow an entity to align hedge accounting more closely with the economics of their risk management activities. The second issue addresses amendments to the definition of Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate so that it would no longer be the only SOFR-based rate included as a U.S. benchmark interest rate under Topic 815. The third issue permits the use of certain float-to-float cross-currency swaps with different reset dates. This would require that the repricing intervals and dates occur every six months or more frequently instead of the current requirement that both legs of a float-to-float cross-currency swap have the same repricing intervals and dates. The deadline for commenting is August 17, 2026.
Securities and Exchange Commission
On May 5, 2026, the Securities and Exchange Commission (SEC) proposed amendments to allow companies to file semiannual reports on new Form 10-S instead of quarterly reports on Form 10-Q to meet their interim reporting obligations. Since 1970, the SEC has required quarterly filings, however, with this amendment companies could decide if quarterly or semiannual reporting is the best option for them in the future. Semiannual filers would file their interim report on new Form 10-S, which requires the same narrative disclosures and financial information as Form 10-Q but would cover a six-month period. The deadline for filing this new form would be 40 or 45 days after the fiscal year’s first semiannual period end. Public comments on these amendments will remain open for 60 days after its publication.
On May 29, 2026, the SEC issued a proposal to fully rescind the climate-related disclosure rules it had previously approved in March 2024. For more information on this topic, see our post here.
Public Company Accounting Oversight Board
On June 25, 2026, the Public Company Accounting Oversight Board (PCAOB) announced that they are seeking public comment on updating the standard-setting and research agendas, revisiting their approach to standard setting, and considering the impact of the recent proposal by the SEC regarding semiannual reporting. In support of their mission to protect investors, the PCAOB had previously issued a request for public comment on their strategic priorities, which sought feedback to help inform the development of the PCAOB’s 2026-2030 Strategic Plan and guide the PCAOB’s focus areas for future standard-setting activities. This current request for public comment seeks further input on the development of their standard-setting and research agendas in different priority areas, including data and technology, fraud, and noncompliance with laws and regulations. Additionally, the PCAOB is requesting comment on various aspects of their existing standard-setting process including priorities, approach, and stakeholder involvement. Possible new approaches include a conceptual framework as well as a principles-based approach to standard setting. Lastly, they are requesting comment on the SEC proposal to allow option semiannual reporting as they are considering whether to make narrow, conforming amendments to AS 6101, Letters for Underwriters and Certain Other Requesting Parties, to accommodate the changes the SEC may adopt to its reporting requirements. Public comment on these topics should be submitted no later than August 7, 2026.
American Institute of Certified Public Accountants
On June 1, 2026, the American Institute of Certified Public Accountants (AICPA) announced they are seeking public comment on the 2027-2030 strategic plan proposals drafted by its Professional Ethics Executive Committee (PEEC) and Peer Review Board (PRB). The role of the PEEC is to promote ethical behavior by AICPA members and others subject to the AICPA Code of Professional Conduct, and the role of the PRB is to oversee a monitoring program for firms of varying practice types and sizes. These proposed plans cite significant issues impacting accounting, including the increased use of AI and automation, new business models and alternative practice structures, emerging areas of sustainability and cybersecurity, the continued pace of mergers and acquisitions, and increasing business and regulatory complexity. The deadline for public comment is August 31, 2026.