2025 in Review

Happy New Year and welcome to 2026! It’s a perfect time for a “year in review” look back at all the major accounting and auditing standards changes from 2025.

FASB: A Year of Targeted Updates

The Financial Accounting Standards Board (FASB) was busier than usual, issuing 12 Accounting Standards Updates (ASUs) over the course of 2025. While this number marks a significant jump compared to previous years, most were niche standards—so no seismic shifts like revenue recognition or lease accounting. Here are the highlights:

• Clarification Related to DISE: Specifically impacts public business entities, focusing on income statement expense disaggregation.
• SEC-Related Narrow Standards: Another update with limited applicability.
• Guidance for Acquisitions of VIEs: Moves from rigid, unintuitive rules to a more principles-based, harmonized approach aligning with voting guidance.
• Share-Based Consideration to Customers: Addresses practice issues between existing standards.
• CECL Update: A much-anticipated change, especially for accounts receivable and contract assets. This introduces practical expedients and an accounting policy election.
• Modernization of Internal Use Software Guidance: Updates an aging standard, removing outdated phases (the “waterfall” methodology) and bringing it closer to current practice.
• Derivative Scope Exceptions: Refines guidance resulting in likely fewer items qualifying to be derivatives.
• Purchased Loan Accounting: Particularly relevant for CECL and financial instruments.
• Hedge Accounting Improvements: Narrower in scope, focused on technical refinements.
• Government Grants for Business Entities: Fills a significant gap exposed during COVID, now providing tailored guidance for businesses (rather than relying on IAS or nonprofit analogies).
• Interim Reporting Improvements: An effort to bring principles-based clarity and consolidate disparate guidance.
• Codification Improvements: Technical tweaks for ease of use.

GASB: One Major Update

The Governmental Accounting Standards Board (GASB) released just one finalized standard, focused on subsequent events. This update adopts terminology better suited to governmental entities, providing clearer, more relevant guidance.

PEEC: Big Changes for 529 Plans and Simultaneous Employment Rules

PEEC also kept busy:

• 529 Plans: Technical revisions now view these as indirect financial interests, easing compliance for those with investments in such plans.
• Quality Management Adjustments: Mainly terminology changes.
• Simultaneous Employment Update: Overhauled rules, especially relating to the Uniformed Services Employment and Reemployment Rights Act, blending rules with principles.
• SSAEs Project (Step One): Both ASB and PEEC are tackling substantial changes in this area, so keep an eye out for developments.

ARSC: Consulting and CAST Practices

The Accounting and Review Services Committee (ARSC) issued SSARS 27, clarifying requirements for consulting engagements—specifically, preparation engagement letters that address evolving CAAS practices.

Looking Ahead: What’s Next in 2026?

Expect more exposure drafts from GASB, particularly on revenue and expense recognition—final standards won’t arrive soon, as big projects require more time. The AICPA is working on confirmation and fraud standards, both of which are eagerly anticipated. FASB also has a full agenda with several noteworthy projects in progress.

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Thanks for joining us for this year in review! We can’t wait to see what 2026 brings. Stay tuned for future blogs, and have a fantastic start to the new year.