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FASB Adds Certain SEC Disclosures to GAAP

On October 9, 2023, FASB issued Accounting Standards Update (ASU) 2023-06, Disclosure Improvements, which closes out a long-running project to incorporate certain SEC disclosure requirements into authoritative accounting guidance (GAAP). The ASU has an unusual effective date and transition requirements since it is contingent on future SEC rule setting. If the SEC fails to enact required changes by June 30, 2027, this ASU is not effective for any entities.
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On October 9, 2023, FASB issued Accounting Standards Update (ASU) 2023-06, Disclosure Improvements, which closes out a long-running project to incorporate certain SEC disclosure requirements into authoritative accounting guidance (GAAP). The ASU has an unusual effective date and transition requirements since it is contingent on future SEC rule setting. If the SEC fails to enact required changes by June 30, 2027, this ASU is not effective for any entities.

Public companies should see little impact but may have to move certain disclosures from the nonfinancial statement portions of SEC filings to the financial statement notes. These disclosures would be new requirements for nonpublic entities. Early adoption is not permitted for SEC filers.



In 2013, the SEC reviewed its disclosures to identify excessive, unduly complex, or redundant disclosure. In August 2018, the SEC issued a final rule, Disclosure Update and Simplification, which simplified or eliminated certain requirements. As part of that project, the SEC highlighted 27 disclosures that overlapped with GAAP and requested that FASB consider formally incorporating certain SEC items into GAAP. FASB issued a proposal in 2019 addressing 19 of the 27 disclosures.

These disclosures are currently required by either Regulation S-X (Reg S-X) or Regulation S-K (Reg S-K). Reg S-X governs financial statements filed with the SEC. In a public business entity’s (PBE) annual report on Form 10-K, Reg S-X governs the information included in Item 8, Financial Statements and Supplementary Data. Reg S-K governs the integrated disclosure requirements for the content of the nonfinancial statement portions of SEC filings (all the content outside Item 8), e.g., general information related to business descriptions, properties, and legal proceedings, as well as management’s discussion and analysis of financial condition and results of operations.

Incorporating the incremental requirements from Reg S-X into GAAP should not affect what is currently included in the audited financial statements of an SEC registrant. However, incorporating incremental requirements from Reg S-K into GAAP may affect what currently is included in the audited financial statements for an SEC registrant. In addition, incorporating the incremental requirements from either Reg S-X or Reg S-K would affect the financial statements of entities other than PBEs and PBEs that are not SEC filers because they are not currently subject to SEC regulations.

New GAAP Disclosures

  • Interim Reporting (Accounting Standards Codification (ASC) 270)
    • Changes in Reporting Entity (ASC 250, Accounting Changes and Error Corrections): Unlike SEC guidance, GAAP currently only requires disclosure of a change in reporting entity, but not the effect on retained earnings. The ASU requires entities to disclose changes in reporting entities in interim periods along with the effect that change has on retained earnings. 
    • Earnings Per Share (EPS) (ASC 260, Earnings Per Share): SEC guidance currently requires the basis of the EPS calculation and the number of shares used in interim financial statements. Current GAAP does not include this requirement and the reporting frequency is ambiguous. ASC 260 requires disclosure for “each period an income statement is presented,” which some may conclude only applies to annual reports. GAAP will be updated to clarify the following disclosures are required in interim periods: 
      • A reconciliation of the numerators and the denominators of the basic and diluted per-share computations for income from continuing operations 
      • The effect that has been given to preferred dividends in arriving at income available to common stockholders in computing basic EPS
      • Securities (including those issuable pursuant to contingent stock agreements) that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive for the period(s) presented
      • The methods used in the diluted EPS computation for each dilutive security, e.g., Treasury stock method, if-converted method, two-class method, or reverse treasury stock method
  • Assets Subject to Lien (ASC 440, Commitments): Currently, ASC 440 requires disclosure of assets pledged as security for loans, and ASC 860 requires disclosure of assets pledged as collateral for repurchase agreements. Assets subject to lien under SEC guidance include all assets. The ASU will require disclosure of all assets that may be subject to lien and the related obligations collateralized.
  • Debt (ASC 470): The SEC has extensive required disclosure for unused lines of credit and the weighted average interest rate for short-term borrowings. There are no similar requirements in today’s GAAP. The ASU adds the following requirements:
    • The amount and terms of unused commitments for long-term financing arrangements (including commitment fees and the conditions under which commitments may be withdrawn) 
    • The amount and terms of unused lines of credit for short-term financing (including commitment fees and the conditions under which lines may be withdrawn) and the amount of those lines of credit that support commercial paper borrowing arrangements or similar arrangements
    • The weighted-average interest rate on short-term borrowings outstanding as of the date of each balance sheet presented for PBEs only
  • Preferred Shares (ASC 505 , Equity—Overall): Current GAAP requires parenthetical disclosure, in the equity section of the balance sheet, for aggregate preferences on involuntary liquidation, if considerably in excess of par or stated value. The SEC has a similar requirement but for amounts other than par or stated value. The ASU deletes “considerably in excess.”
  • Derivative Accounting Policies (ASC 815, Derivatives and Hedging): SEC guidance requires disclosure of derivative presentation in the cash flow statement, while ASC 815 currently covers only the income statement and balance sheet. The ASU adds a cross reference to link where derivative financial instruments and their related gains and losses are reported in the statement of cash flows.
  • Repurchase Agreements (ASC 860, Transfers and Servicing): The SEC includes several presentation and disclosure requirements for repo and reverse repo agreements that are incremental to existing GAAP requirements. The ASU adds the following requirements to GAAP:
    • Clarify that accrued interest be included in the disclosure of liabilities incurred in securities lending transactions
    • Present separately the aggregate carrying amount of reverse repurchase agreements on the face of the balance sheet if that amount exceeds 10% of total assets
    • Disclosure of the weighted-average interest rates of repurchase liabilities for PBEs
    • Disclose the name, amount at risk, and weighted average maturity of the agreement for each individual or group of related counterparties if the amount exceeds 10% of stockholder’s equity
    • Disclosure for reverse repurchase agreements that exceed 10% of total assets on whether there are any provisions in a reverse repurchase agreement to ensure that the market value of the underlying assets remains sufficient to protect against counterparty default and, if so, the nature of those provisions
  • Industry-Specific Disclosures
    • Oil- and Gas-Producing Activities (ASC 932, Extractive Activities—Oil and Gas): The SEC requires disclosure for each annual period, while GAAP guidance is not clear that the disclosures apply to all periods presented. The ASU clarifies that the supplemental information is required for all periods. This is only required for publicly traded companies.
    • Investment Companies (ASC 946-20, Financial Services—Investment Companies—Investment Company Activity): Investment companies will now be required to disclose the components of capital on the balance sheet.
    • REITs (ASC 974, Real Estate Investment Trusts): SEC guidance requires disclosure of the tax status of distributions per unit; there is no comparable requirement in GAAP. The ASU requires a REIT to disclose the tax status of distributions per unit, e.g., ordinary income, capital gain, and return of capital.

Transition & Effective Date

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. Entities subject to the two-year deferred effective date are not prohibited from early adoption.

These amendments should be applied prospectively.

For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.


The assurance team at FORVIS delivers extensive experience and skilled professionals to assist with your objectives. Our proactive approach includes candid and open communication to help address your financial reporting needs. At the end of the day, we know how important it is for you to be able to trust the numbers; our commitment to independence and objectivity helps provide the security and confidence you desire. Whether you are publicly traded or privately held, FORVIS can help provide an independent and objective view into your financial reporting. We leverage the latest technologies and process automation tools to provide companies assurance on their financial statements to help meet stakeholders’ needs. If you have any questions or need assistance, please reach out to a professional at FORVIS.

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