Heads Up

This issue discusses certain recent activities undertaken by the PCAOB as a result of what a Board news release describes as the PCAOB’s “assessment of priorities that advance audit quality to protect the interest of investors.” Specifically, the newsletter highlights (1) the inaugural meetings of the PCAOB’s Investor Advisory Group and Emerging Issues Advisory Group, (2) the PCAOB’s adoption of new requirements for the lead auditor’s use of other auditors, and (3) the PCAOB’s standard-setting and research agendas.

This issue summarizes and compares key provisions of (1) the SEC’s March 2022 proposed rule on climate-related disclosure, (2) the International Sustainability Standards Board’s March 2022 proposed standards on general sustainability and climate reporting, and (3) the European Financial Reporting Advisory Group’s April 2022 proposed European Sustainability Reporting Standards developed in accordance with the European Commission’s proposed Corporate Sustainability Reporting Directive. The newsletter also discusses considerations for companies as they take action to prepare for the changing disclosure landscape.

This issue discusses the FASB’s newly issued Accounting Standards Update (ASU) No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect loan refinancings and restructurings for borrowers experiencing financial difficulty.

This issue expands on our March 21, 2022, executive summary by providing details and considerations related to specific disclosures that would be required under the SEC’s proposed rule "The Enhancement and Standardization of Climate-Related Disclosures for Investors." Under the proposed rule, such disclosures would include metrics that reflect the impact of climate-related events, transition activities, and expenditures; financial statement estimates and assumptions; greenhouse gas emission data; governance plans; and climate-related risks, among other information.

This issue discusses the FASB’s newly issued Accounting Standards Update (ASU) No. 2022-01, Fair Value Hedging — Portfolio Layer Method. The ASU clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. ASU 2022-01 amends the guidance in ASU 2017-12 that, among other things, established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the “portfolio layer” method.

This issue discusses the SEC’s proposed rule The Enhancement and Standardization of Climate-Related Disclosures for Investors. Under the proposed rule, a registrant would be required to provide disclosures about greenhouse gas emissions (with attestation for Scope 1 and Scope 2 disclosures), certain financial statement disclosures, and qualitative and governance disclosures within its registration statements and annual reports (e.g., Form 10-K). Comments on the proposed rule are due 30 days after its publication in the Federal Register or May 20, 2022, whichever is later.