Second Quarter — 2023

by Magnus Orrell and Joseph Renouf, Deloitte & Touche LLP

Welcome to Quarterly Accounting Roundup: Second Quarter — 2023. The risks and uncertainties associated with the current macroeconomic environment continue to be top of mind for many investors and financial services professionals. For example, many commercial real estate entities have encountered increased costs of capital and tightening lending standards while also dealing with higher levels of maturing debt; reductions in the volume of real estate transactions; and evolving real estate demands and preferences related to the way people work, live, and shop. In addition, recent failures and takeovers in the banking sector have underscored the need for both banking and nonbanking companies to assess their exposures to such events and determine the related accounting and reporting impacts.

Environmental, social, and governance (ESG) matters also continue to grab headlines. A particularly important recent publication on this topic was COSO’s1 interpretive report on how its Internal Control — Integrated Framework (the “COSO Framework”) can apply to sustainable business activities and information. The report illuminates how the COSO Framework’s 5 components and 17 principles can help companies establish an effective and integrated system of internal control over their material or decision-useful sustainable business information.

The FASB has also been fairly busy, releasing (1) Accounting Standards Updates (ASUs) on investments in tax credit structures and common-control leasing arrangements as well as (2) proposed ASUs on profits interest awards and crypto assets. The Board also recently published a new chapter (on the reporting entity) of its conceptual framework.

As for regulatory news, key final rules recently released by the SEC include those on (1) amending the share buyback disclosure requirements and (2) preventing security-based swap fraud and undue influence over chief compliance officers. The Commission has also approved the compliance date related to its clawback requirements.

On the international front, the IASB released an important set of amendments to IAS 122 that provide a mandatory temporary exception from the new “Pillar Two” income tax requirements imposed by the Organisation for Economic Co-operation and Development (OECD), which, among other things, establish a minimum global corporate tax rate of 15 percent.

Footnotes

The Committee of Sponsoring Organizations of the Treadway Commission.

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.

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