Day 2 Highlights | 2023 AICPA & CIMA Conference on Current SEC and PCAOB Developments

Day 2 of the AICPA Conference on Current SEC and PCAOB Developments continued with vital discussions on shaping the financial landscape. Here are key highlights from CFGI, providing insights into updates impacting financial reporting and regulatory compliance.

FASB’s Investor Outreach Identifies Disaggregation of Income Statement Expenses:
Through their investor outreach program, the FASB identified the disaggregation of income statement expenses as the most meaningful enhancement to financial disclosure. The FASB is set to hold a public roundtable regarding this matter on December 13th. The public roundtable follows the receipt of approximately 80 comment letters on the topic. Though the topic has come up in prior FASB discussions and deliberations, the continued interest from the investor community demonstrates the need for more detailed information in financial reporting.

FASB’s Update on Segment Reporting:
The FASB recently issued its accounting standards update (ASU 2023-07) focusing on improvements to segment reporting. This update includes requirements for disclosure of significant segment expenses and segment disclosures on an interim basis, reinforcing the commitment to refining reporting practices for better transparency and decision-making.

SEC’s Division of Corporation Finance Addresses Hot Topics
The SEC’s Division of Corporation Finance took the stage to discuss pressing issues about which registrants frequently inquire. Among these topics, a few received particular attention during the conference:

Non-GAAP Measures: Registrants opting to disclose non-GAAP measures were advised during the conference to ensure the purpose of each of these measures is clearly defined and any adjustments made in the reconciliation back to the closest GAAP figure are clearly defined, as well. This clarity in disclosure for investors is a consistent message from the Division of Corporation Finance and the emphasis underscores the SEC’s commitment to promoting accurate and transparent financial reporting.

Pay vs. Performance: The SEC’s Division of Corporation Finance issued a series of Compliance & Disclosure Interpretations (C&DIs) earlier this year, providing guidance on the evolving landscape of the “pay vs. performance” disclosures rules. Companies are encouraged to refer to accounting advisors and these C&DIs as they navigate the complexities of executive compensation reporting.

Erroneously Awarded Incentive Compensation Clawback Rules: Registrants were advised to seek guidance from legal counsel to ensure the appropriate adoption of incentive compensation clawback rules. Particularly, the correct selection of checkboxes on certain SEC filings is crucial, which is driven by a complete and accurate assessment of any corrections made to the included financial statements and the definition of an error under US GAAP.

The AICPA Conference on SEC and PCAOB Developments remains a key platform for professionals to stay informed on regulatory changes and best practices. Stay tuned for more updates as CFGI navigates and shares insights from the dynamic SEC and PCAOB landscape.