FASB Issues New Interim and Quarterly Reporting Standard, Clarifying Disclosure Requirements
FASB issued a new accounting standards update (ASU 2025-11) on Monday, aimed at clarifying existing rules under interim reporting (Topic 270), without changing or reducing requirements. The new rules require entities to disclose significant events that have occurred since the last fiscal year reporting period, applicable to quarterly and reporting periods shorter than a full operating cycle or year. Effective for public companies after December 15, 2027, and for private and other entities after December 15, 2028.
Key Points at a Glance:
- The Financial Accounting Standards Board (FASB) issued a press release on Monday announcing a new standard aimed at clarifying, rather than changing or reducing, existing interim reporting rules (under Topic 270 of GAAP) for interim reporting periods.
- One provision in the new rule requires entities to disclose events that have occurred since the company's last annual reporting period and that have a material impact on the entity. This requirement stems from the text of the newly issued standard.
- The rule covers quarterly reports and any reports for periods shorter than a "full operating cycle or year," and is effective for public companies after December 15, 2027, and for private companies and all other entities after December 15, 2028.
In-Depth Analysis:
This issuance marks the 11th Accounting Standards Update issued by the FASB this year, tying the high set in 2020 and more than double the total of four issued in all of 2024, according to the FASB website. A FASB spokesperson said in an email last week that one more could be issued before the end of the year.
The description of the minimum disclosure requirements in the new rule highlights the standard-setter's efforts to make interim reporting more detailed. The new standard states: "Many public companies report summarized financial information at regular interim dates with far less detail than in annual financial statements. While this information provides more timely information than issuing complete financial statements at each interim period end, the timeliness of presentation may be partially offset by the reduced level of detail in the information."
The additional information required to be disclosed under the new guidance varies by type of entity. For example, public companies that report summarized financial information between annual reports must at least include items such as sales or total revenues, provision for income taxes, net income and comprehensive income, and changes in accounting principles, estimates, or the reporting entity. Additionally, there is specific guidance for private companies and not-for-profit organizations.