February was a quiet month for the standard setters! While no new standards were issued, several meetings were held, and exciting topics were discussed.
On February 7, the FASB met to discuss improving hedge accounting. The Board discussed comment letter feedback on proposed amendments related to contractually specified components in cash flow hedges of nonfinancial forecasted transactions. The Board decided to amend the guidance used to identify risk components eligible to be designated as the hedged risk in a cash flow hedge of a forecasted nonfinancial transaction. The Board decided that the determination of whether a component is eligible to be designated as the hedged risk should be based on an evaluation of whether the component satisfies the clearly-and-closely-related criteria within the normal purchase and normal sale scope exception. The Board decided not to affirm the proposed addition of paragraph 815-20-25-15B and instead decided to indicate that entities are not precluded from hedging a variable risk component in a forward contract accounted for as a derivative if the associated forecasted transaction is probable of occurring.
Additionally, the FASB met on February 28 to discuss the profits interest awards project. The Board discussed a sweep issue related to the issuance of a final update. The Board also began its redeliberation on the Purchased Financial Assets Project, discussed comment letter feedback, and provided the staff with direction on potential paths forward.
Although there wasn’t too much activity at the GASB this month, the Board will meet March 5-7 in Norwalk to discuss a variety of topics. Some items on their agenda include revenue and expense recognition and infrastructure assets.
In other news, the AICPA’s Professional Ethics Executive Committee (PEEC) held meetings on February 20 & 21. Their agenda was packed with a variety of hot topics, such as 529 plans, private equity investment in firms, digital assets and AI, simultaneous employment or association with an attest client, and SSAE engagements. PEEC also has the goal of convergence with the International Ethics Standards Board for Accountants (IESBA). At PEEC’s meeting, a variety of IESBA convergence topics were discussed, such as fees, public interest entities, tax services, and engagement team/group audits using the work of an external expert.
Stay tuned for more updates next month!
