Third Quarter — 2023

Welcome to Quarterly Accounting Roundup: Third Quarter — 2023.

Sustainability disclosure requirements have continued to be a major area of focus globally. In the United States, two bills related to climate reporting recently passed the California state legislature and will become law if they are signed by Governor Gavin Newsom (he has until October 14, 2023, to sign or veto the bills). These bills would affect larger U.S. public and private entities that “do business in California.” Internationally, in late June, the International Sustainability Standards Board (ISSB) issued its inaugural disclosure standards, the purpose of which is to “require an entity to disclose information about its sustainability-related risks and opportunities.” Further, the European Commission recently adopted the European Sustainability Reporting Standards (ESRS), which provide supplementary guidance for companies within the scope of the E.U. Corporate Sustainability Reporting Directive (CSRD).

Other key accounting, financial reporting, auditing, and regulatory developments over the past several months include:

• The FASB’s issuance of:

  • An Accounting Standards Update (ASU) that provides U.S. GAAP guidance on the accounting for joint venture formations.
  • Proposed ASUs that would amend (1) the accounting for purchased financial assets and (2) the disclosure requirements related to the disaggregation of income statement expenses.
  • A new chapter, “Recognition and Derecognition” (Chapter 5), of its Conceptual Framework for Financial Reporting.
• The AICPA’s addition of a new chapter to its practice aid on digital assets.
• The PCAOB’s release of proposed amendments that would improve audit quality by addressing “audit procedures that involve technology-assisted analysis of information in electronic form.”
• A statement by SEC Chief Accountant Paul Munter on the importance of risk assessment to effective financial reporting and internal controls.
• The SEC’s issuance of a final rule that enhances the cybersecurity disclosure requirements for public companies.
• The IASB’s publication of amendments that clarify the requirements related to a currency’s lack of exchangeability.