Third Quarter — 2022

by Magnus Orrell and Joseph Renouf, Deloitte & Touche LLP

Welcome to Quarterly Accounting Roundup: Third Quarter — 2022. Recent standards issued by the FASB include (1) a final Accounting Standards Update (ASU) clarifying the guidance in ASC 8201 on the fair value measurement of an equity security subject to a contractual sale restriction and (2) proposed ASUs on the transition guidance related to sold insurance contracts and on accounting for investments in tax credit structures.

As usual, it was a fairly busy quarter for the SEC. Probably the most significant development was the Commission’s issuance of a final rule on pay versus performance, under which certain registrants must provide disclosures about executive pay and company performance within any proxy statement or information statement for which executive compensation disclosures are required. According to SEC Chair Gary Gensler, the final rule, which adds Item 402(v) to SEC Regulation S-K, is intended to “help investors receive the consistent, comparable, and decision-useful information they need to evaluate executive compensation policies. That serves investors and our markets.” In addition to the pay-versus-performance rule, other notable recent SEC publications include amendments to the rules governing its whistleblower program, a final rule that makes certain inflation adjustments to the revenue threshold for emerging growth companies (EGCs), and a request for comment on the Commission’s draft strategic plan for 2022–2026.

There was also a flurry of activity at the PCAOB. Particularly notable was the release of a rule that is intended to “strengthen the requirements and responsibilities that apply to auditors who plan and perform audits that involve other accounting firms and individual accountants.” In addition, the PCAOB signed a Statement of Protocol agreement with Chinese authorities that serves as an initial step in opening access for the PCAOB to “inspect and investigate completely registered public accounting firms in mainland China and Hong Kong,” released a request for comment on its five-year strategic plan, and published a resource for audit committees, among other things. (For more information about the PCAOB’s recent activities, see Deloitte’s June 28, 2022, Heads Up.)

Footnotes

For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”

Conclusions of the FASB, GASB, IASB, and IFRS Interpretations Committee are subject to change at future meetings and generally do not affect current accounting requirements until an official position (e.g., Accounting Standards Update or IFRS Accounting Standards) is issued. Official positions are determined only after extensive deliberation and due process, including a formal vote.

Further information about the standard setters can be found on their respective Web sites as follows: www.fasb.org (FASB); https://www.fasb.org/page/PageContent?pageId=/about-us/advisory-groups/eitf/openissuesandproposedagenda.html (EITF); https://www.aicpa-cima.com/home (AICPA & CIMA); www.sec.gov (SEC); https://pcaobus.org (PCAOB); https://fasab.gov (FASAB); www.gasb.org (GASB); and www.ifrs.org (IASB and ISSB).

Quarterly Accounting Roundup is prepared by members of Deloitte’s National Office. The purpose of this publication is to briefly describe key regulatory and professional developments that have recently occurred in the field of accounting and to provide links to locations where additional information can be found on each topic. Readers seeking additional information about a topic should review the information referred to in the hyperlinks and not rely solely on the descriptions included in this communication.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

As used in this document, “Deloitte“ means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.