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Setting the standard: FASB activity in 2026
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FASB standard setting activity continues full steam ahead in 2026, with projects focused on crypto assets, hedge accounting, liability-versus-equity classification, the statement of cash flows, and other key accounting topics. While the pace of new accounting standards may appear quieter than in recent years, the Board has been actively evaluating stakeholder feedback from its agenda consultation process and advancing projects that could lead to significant future accounting updates. This episode discusses the key themes emerging from that feedback, recent agenda decisions, and other developments companies should monitor.
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About our guest
Brandon Browne is a FASB Practice Fellow focusing primarily on standard setting matters affecting the financial services industry including hedging, current expected credit losses, paid-in-kind dividends, commodities accounting for banks, and others. Prior to his role at the FASB, Brandon was a director in the PwC Assurance practice, mainly supporting multinational companies in the Insurance industry and was also a member of the National Office where he focused on the review of SEC documents.
About our guest host
Angela Fergason is a partner in PwC’s National Office. She is an experienced consultant on technical accounting and financial reporting matters, specializing in revenue recognition, employee compensation, and emerging issues impacting the technology industry. Angela is also PwC’s standard setting leader, managing PwC’s strategy for engaging in accounting standard setting activities.
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Thought Leadership from PWC's National Office.
SPEAKER_02Hello, and welcome to PWC's Accounting Podcast. I'm Heather Horn. In today's episode, we're providing an update on the FASBE standard setting activities. We'll discuss recent developments, the current standard setting landscape, and what it all means for companies as they plan for the future. While the pace of new accounting standards may appear quieter than in recent years, the board's been actively evaluating feedback from its recent agenda consultation process and making important decisions about which topics to prioritize. Joining Angela is Brandon Brown, a current practice fellow at the FASBE. Together, they'll discuss key themes emerging from stakeholder feedback, recent agenda discussions, and what companies should be watching for through the remainder of 2026 and beyond. So a lot to cover and let's get started.
SPEAKER_03Well, thanks for joining me today, Brandon. It's great to have you here to discuss the FASB standard setting progress so far this year in 2026. I'm looking forward to getting into some of these details because I know for listeners who haven't been closely following the FASB's activities may not be aware of how much is really going on already this year.
FASB standard setting process
SPEAKER_03But uh maybe to start, I think it could be helpful if you would provide a little bit of a quick reminder on the key steps in the FASBE's standard setting process.
SPEAKER_04Sure. Thanks for having me, Angela. Uh I also quickly wanted to provide the FASBE standard disclaimer that any views I express today are my own and don't represent official positions of the FASBE. The FASBE develops official positions only after extensive due process and deliberations. But okay, so the standard setting process, uh, standards really can begin in a variety of ways, and they generally come from uh some sort of request from a stakeholder. And that could be either as part of a specific agenda request that's submitted. Um, it could be part of the overall agenda consultation process like the one going on now, which we'll discuss, uh, or even as part of feedback from one of the FASBE advisory councils like the EITF or the private company council, the PCC. So after a request is received, the FASBI staff will perform initial research and outreach on the topic area before bringing the item back to the board for a vote. And the board then determines whether to add the project to its technical agenda to proceed with standard setting activities. Um alternatively, the chair may decide that more research is needed. Uh, so they could add the project to the research agenda, or the board may ask other questions for the staff to come back with. If the board decides to add a project to the technical agenda, the staff again considers what additional outreach, outreach, and research may be necessary with the goal of bringing back the project to the board for initial deliberations. And once those are completed, the board will vote to proceed to an exposure draft. Uh the staff will then receive feedback based on comment letters to that exposure draft, as well as through advisory groups and other channels, and then summary, they'll summarize this feedback for discussion with the board in a public meeting. Uh, the board then considers whether any potential amendments to the guidance are necessary as part of those re-deliberations. Um, and then when those deliberations are completed, the board will vote to proceed to a final accounting standards update. So a lot of steps of the process. I I would just highlight how critical feedback received by the board is to the process overall. Uh, there's opportunities to receive that feedback from stakeholders throughout the standard setting activities, and it's really considered a backbone to the process overall.
SPEAKER_03All
Agenda consultation and stakeholder feedback
SPEAKER_03right. Thanks. That's helpful. So helpful to think through all those different steps until we get to the final standard. And I know a lot of what the FASBI's been doing so far this year is kind of in those earlier stages that you talked about. You mentioned the agenda consultation, and people may not be that familiar with what that is. I know that kind of got kicked off with the invitation to comment that the FASBE did last year. So maybe give us a little background on that. Sure.
SPEAKER_04Yeah. So the invitation to comment or the ITC, or sometimes what we call the agenda consultation process, is really central to how the FASB sets priorities. It gives stakeholders an opportunity to weigh in on accounting issues and which warrant the board's attention and what potential solutions to those issues may be. This helps the board to prioritize uh standard setting activities. The FASB also conducts this agenda consultation process every few years as a way to refresh its uh agenda following the finalization of various accounting standards, uh, with the last broad agenda consultation occurring in 2021. So the FASBE staff begins the ITC process by engaging with a variety of stakeholders to identify potential accounting, reporting, or other issues. Uh the staff then synthesizes these issues into a document that's issued for public comment. And the documents organized by topic to provide sort of a framework for stakeholders to respond. And that was released in January 2025 with comments due back at the end of June 2025.
SPEAKER_03Can you give us some flavor of uh what kind of feedback came in on that invitation to comment?
SPEAKER_04Sure. So the staff reviews and organizes all of the stakeholder responses, and they they received over 100 individual responses to the ITC. So potential agenda topics are presented to the board based on that feedback. And in some cases, stakeholders may be providing feedback that certain areas of GAAP may longer be working as intended, that practice diversity is emerging, or that changes in the economy or business models have raised sort of new challenges related to reporting. So feedback on the 2025 ITC came in from a wide range of types of stakeholders. So think preparers, audit firms, you know, like PWPC, investors, industry groups, state CPA societies, and a variety of others. And after evaluating the feedback, the board generally decides whether to add a project related to that topic to its technical agenda or not. In other circumstances, the chair may add a topic to the research agenda to address further questions, or board members may request further research to be performed by the staff. Importantly, a project is only added to the technical agenda after a vote by the majority of the board members. And all issues are evaluated against the same agenda decision criteria regarding pervasiveness, um, identifiable scope and whether they can identify a solution.
SPEAKER_03All right. Thanks for that uh summary of the process. Let's let's talk about some of the themes that came through this this time around on the feedback.
SPEAKER_04Sure. So with a few exceptions, which we'll talk about, um the majority of the feedback from stakeholders aligned with the views that were expressed by Rich Jones, the chair of the FASB, that really the existing GATT framework is robust and comprehensive, meaning that there are limited, you know, larger scale, significant issues to address. And most potential issues are narrow, uh, relatively targeted. So in that vein, feedback was received regarding topics such as troubled debt restructuring, renewable energy partnerships, asset retirement obligations, payments received from a vendor in an airline, in an airline industry, um, multiple element software arrangements, all topics which I think we can agree are relatively narrow, even though they may be, you know, very important to specific stakeholders.
SPEAKER_03Yeah, I could see how you know individual companies or even industries might have like a topic that's very important to them, but the board can't necessarily address all of the topics that come in through the feedback. Uh
Crypto asset projects
SPEAKER_03all right, so let's talk about some of the specifics that uh that did come up that the the board may be taking action on. I know that accounting for crypto assets continues to be a hot topic. Uh, what did we see in that area?
SPEAKER_04Yeah, that's correct. Crypto continues to be a very hot topic. Uh, in response to the ITC and other feedback, the FASBE board has added two projects to the technical agenda. So the first project relates to the accounting for transfers of crypto assets and specifically addressing issues related to wrap tokens and receipt tokens, which are instruments that provide the holder with the right to receive a separate crypto asset, as well as clarifying the derecognition guidance for crypto transfer arrangements to assess whether control of a crypto asset has been transferred and what the accounting implications to that may be. This issue has become more prominent as lending activities within the crypto space has become more prevalent. The other project relates to the classification of certain digital assets, specifically stable coins, as cash equivalents. Um importantly, the board is not changing the definition of cash equivalents, but rather the plan is to provide some illustrative examples regarding what stable coins may meet the definition of a cash equivalent.
SPEAKER_03All right. One thing I noted in those discussions is that they're proposing a disclosure that may apply more broadly than just to stable coins. Is that right?
SPEAKER_04That's correct. Yeah, the board proposed a new disclosure uh for all entities to provide more detail about significant classes of cash equivalents. Um again, even if a company's out there doesn't hold stable coins, uh, this would affect them. So something they may need to react to.
SPEAKER_03Yeah, something to keep an eye out on.
Hedge accounting workstreams
SPEAKER_03All right. Any other issues to touch on on the ITC feedback?
SPEAKER_04Sure. Maybe two others I would highlight that are probably a bit broader or more impactful would be hedge accounting and debt versus equity.
SPEAKER_03Those I know are topics that are near and dear to you. So let's let's uh let's start with uh hedge accounting.
SPEAKER_04Sure. So so for a bit of background, I I think generally there has been uh a hedge accounting project on the FASBE's agenda in in one form or another for probably the past 20 years or so, roughly since you know the original hedge accounting guidance came out. And in some ways, that's not surprising given how complex both the hedge accounting rules are, but also the underlying transactions that um companies are looking to hedge.
SPEAKER_03So a lot of a good area for ongoing improvements, right?
SPEAKER_04Yeah, a lot of a lot of complexity for sure. Um so looking at the feedback from the current agenda consultation, some stakeholders suggested you know the board take an entirely fresh look at the hedge accounting model overall, um, which was probably somewhat fueled by the activities by the IASB related to their dynamic risk management hedging project. In addition, other stakeholders suggested that the board tackle more narrow issues associated with the limitations in the current hedge accounting model, and you know, that would be a more shorter term focus. So, as such, the staff developed a plan that includes three separate hedging work streams, a short, medium, and longer term project, which will allow sort of some of those narrower tweaks to be made in the short term while still focusing on potentially some fundamental changes over the long term. So, a bit more detail about those three projects. So the short-term project, which the board had has already added to the technical agenda and completed some of their initial deliberations on, relates to certain targeted improvements to accounting to the hedge accounting for interest rate risk hedging and net investment hedging. Importantly, this is expected to allow interest rate risk hedging of held to maturity or HTM debt securities, which generally is not allowed today. Um then there's also a plan to make a few other tweaks to the existing hedge model as part of that short-term project. So we expect to see an exposure draft on that sometime, sometime later this year. The medium-term project relates to expanding the portfolio layer method or PLM to certain liabilities. And for those that aren't familiar with that model, PLM exists today for assets and was largely designed to allow banks to hedge portfolios of assets with prepayment risk, which are primarily mortgages. So this current project would look to expand PLM to allow hedging for certain liabilities, including potentially things like insurance liabilities, bank certificates of deposits, or a company's long-term debt. This project was uh added to the technical agenda back in April. And finally, the longer-term project. So the chair has added a research project to the agenda to sort of broadly reconsider the hedge accounting model in the longer term. And this project will seek to address some of those uh underlying complexities in the rules and existing limitations that are inherent or which have built up over time. So really a fresh look at the model overall.
SPEAKER_03All right. So a lot more to come on hedge accounting. Um, all
Liability-versus-equity classification
SPEAKER_03right, let's talk about another, you know, complex financial instrument area, uh, debt versus equity. What are we looking at there?
SPEAKER_04Sure. So regarding debt versus equity, this would be another project potentially with broader applicability and maybe more consequential implications than some of the other issues we discussed. The project explicitly relates to distinguishing liabilities from equity for classification purposes. Feedback in this area has indicated that the rules determining the classification as either liabilities or equity were somewhat arbitrary, they're complex, they're time consuming, and they sort of lack this central kind of guiding principle that would help companies decide that classification. So I think the thought is here there's a sort of an amalgamation of rules over time that are cobbled together rather than something that has a central principle. So the project focuses on the indexation guidance in subtopic 815.40. Uh, the board has decided to pursue what they're calling an acceptable variables approach, which means the improve step two of the indexation guidance, which evaluates settlement provisions of a given instrument to determine whether the instrument is classified as equity or liability. Under this approach, an instrument would be considered indexed to an entity's own stock, which is a requirement for equity classification, as long as the variables that affect the settlement amount are related to certain acceptable variables. And there's a long list, I won't read them all or anything like that. But um, this there's the entity's own stock price, the stock price of the instrument, term, expected dividends, and a variety of other options.
SPEAKER_03Like big picture is the expectation that that would result in some changes in outcomes.
SPEAKER_04I think the really the purpose of the project is to make make the actual classification easier, right? To simplify the rules. Um I don't think there's an explicit goal to increase whether certain instruments are classified as debt or or liability, libraries or equity.
SPEAKER_03Okay. Well, some simplification, I'm sure, will be welcome by Prepares. Okay, so um we've covered some of the big ticket items. I know there was a really long list of other potential topics. Now you mentioned a few sort of narrower issues that came up in the feedback. Um, so I know the board is sort of working their way through that list. Can you kind of summarize some of the decisions that we've seen already?
SPEAKER_04Sure. So in addition to the agenda decisions on crypto and hedging, liabilities, and equity, uh, the board has added a few sort of generally more targeted projects to the technical agenda as a result of the feedback. So these would include things like the accounting for commodities, equity method of accounting, definition of common control, non-refundable transferable tax credits, and a couple of other issues specific to investment companies on contractual sale restrictions and private credit disclosures.
SPEAKER_03Okay. So uh that was a long list. Any of those already sort of moving past the initial discussion phase?
SPEAKER_04Yeah, there's two. So uh the board discussed the equity method of accounting project in May and has asked the staff to move forward with an exposure draft that will primarily address using a single threshold for significant influence for applying the equity method, uh, regardless of the type of entity, uh, making some clarifications and improvements to the significant influence guidance, um, but also adding some illustrative examples for allocating equity in earnings in complex allocation structures. And the other one, though, the board has also decided to move forward with an exposure draft on the accounting for commodities project, which will provide banks with an accounting policy election to measure their tangible commodities at fair value. The others we mentioned are all generally in the early stages at the time of recording this podcast.
SPEAKER_03Okay. I'm sure the equity method of accounting changes is something that piques some interest. So people will definitely want to be on the lookout for those uh upcoming exposure drafts. Um, what about other potential projects? Have they made other decisions, maybe to not pursue things?
SPEAKER_04Yeah. So certain projects, other projects have been added uh to the research agenda, and and board members have requested additional information in certain areas. So that would include things like consolidation for business entities, goodwill impairment, financial key performance indicators or KPIs, uh, intangibles, and the definition of a public business entity. And on the other side, there's things the board has decided not to add projects to the technical agenda in a number of areas, including things like alternative funding arrangements or AFAs, asset retirement obligations or AROs, partnership accounting, personal financial statements, payments received from a vendor in the airline industry, and a number of other projects. Generally, these were not added because the board did not view them as pervasive issues. They believed current standard setting was sufficient, um, or did not believe there was a feasible solution, or, you know, or potentially for other reasons.
SPEAKER_03So, of those uh topics you just listed, especially those in the research phase or looking for additional information, I noticed you talked about goodwill impairment. I'm sure that's one people are interested in hearing being sort of back on the agenda. A while ago, there was some discussion on goodwill and whether to amortize, and then it came off the agenda. So now we're seeing goodwill impairment back on. Um, do you know what they're thinking about doing this time around?
SPEAKER_04Yeah. So since it's still in the research stage, it's a little early to speculate on the future of that project. However, the board did ask the staff to perform some additional research on whether there may be an opportunity to simplify the subsequent accounting for goodwill. Uh, and that's really in two areas. So one is whether to require impairment testing upon only a triggering event. So removing the current annual requirement, um, and also whether to allow testing for impairment at the operating segment level. Um, so again, not an official project yet, just on the research agenda, likely more to come on this issue.
SPEAKER_03Okay, I'm sure people will be interested in hearing updates on that one.
Other projects and what’s next
SPEAKER_03Um, there's another topic that uh you haven't mentioned yet, which is the cash flow statement. Uh, what are we hearing on that topic?
SPEAKER_04Yeah, so this has been an interesting one because there's been feedback that the cash flow statement could be improved for some time and uh for some industries, notably financial institutions, um, and that maybe this information is not currently very useful. However, there really hasn't been a consensus yet on the best path forward. So a project on the statement of cash flows remains on the research agenda, but the board recently voted to remove an existing project from the technical agenda that was focused on potential improvements to the cash flow statement for financial institutions. Uh, but the board asked the staff to keep doing research on alternative disclosure. And as we are recording this, the FASBE has added a meeting to discuss the statement of cash flows project. So definitely more to come in this area.
SPEAKER_03Okay, another one to keep an eye out for. So before we wrap up, why don't you recap what you expect we're gonna see from the FASBE uh for the remainder of this year?
SPEAKER_04Sure. So as I mentioned, the board's current timeline, which is definitely always subject to change, but shows an expectation to issue exposure drafts on cash equivalence, hedge accounting, liabilities and equity, and the equity method of accounting before the end of the year. So additionally, the board plans to issue an exposure draft with a series of codification improvements, which are generally minor cleanup type amendments. Um, lastly, the Emerging Issues Task Force or EITF continues to discuss a few more narrow topics on their agenda that will likely see some movement on with the FASBI board as well. I also expect the board will continue to make decisions about whether to add any more projects to the FASBI's technical agenda related to ITC feedback. There are several that they have not discussed, including a few revenue-related topics. And the staff will come back with more information in those areas where the board has requested more research. And the board will also likely begin initial deliberations on some of the new projects recently added that we talked about earlier. Um, of course, I want to mention that stakeholders can always continue to submit agenda requests, uh, which the board will evaluate. So that would be outside of the ITC process.
SPEAKER_03So it's fair to say the agenda is never really like fixed or closed or shut down to new new topics.
SPEAKER_04That's right. Yeah. While there is a more extensive process every few years to get feedback on the agenda overall, which is really the ITC process, getting feedback from stakeholders and monitoring the general financial reporting environment is an ongoing process that's iterative with both staff and the board.
SPEAKER_03All right. So to summarize, it seems like we're not really expecting any additional new standards in the latter half of 2026. But there's still going to be a lot of activity, a lot of new exposure drafts coming out. So still things that companies are going to want to monitor.
SPEAKER_04Yes, absolutely. I I would say uh the other thing I, you know, I would highlight would be um from my time at the FASB, is that it's very clear that the feedback loop between stakeholders and the FASB staff has been critical to the success of the standard setting process and something the FASBE takes very seriously. Uh to that end, I would encourage all stakeholders to please consider sort of engaging with that process before standards get finalized. Uh so that could be responding to exposure drafts, submitting agenda requests, discussing issues with industry representatives or trade groups or any of those. Really anything that you can do to engage with and improve the process, I think could be helpful to what is really one of the foundations of what makes the US capital markets great.
SPEAKER_03Yeah, I really echo the importance of engagement in the process. And it really doesn't matter, right, if you're a big you don't have to be a big public company, right, to engage in some of the standard setting process because the FASB is looking for feedback from all types of companies, you know, different industries, smaller companies, bigger companies, private, public. So really anybody uh and everybody should be engaged in the standard setting process. Is that fair? Yep, that's right. So, how do you how do you keep up? How do you know what's going on?
SPEAKER_04Yeah, so the the FASB's website is a good place to start. Uh, there you can see sort of what's on the current technical agenda, as well as information about upcoming and past board meetings and tentative decisions that were made, as well as timelines for responding to any of the current exposure drafts. Uh, there's also resources aimed at specific stakeholders, so private companies, not for profits, investors, et cetera. Um, and of course, there's always an option to sign up for alerts if you don't want to miss an update. So you'll get regular emails from the Thasby about what's going on.
SPEAKER_03I know I'm signed up for those alerts. So uh definitely if you're interested, you should sign up for those. But I'll also put a plug in for our PWC weekly newsletter, uh, where we also will highlight key updates and uh companies can sign up on Viewpoint, or anyone can sign up on Viewpoint to get that newsletter if you aren't already receiving it. All right, so thanks again, Brandon, for joining me today and sharing these updates and insights. Thanks so much.
SPEAKER_01That's our show for today. Tune in next week for more fresh episodes so that you never miss any of our audio content. Follow the PWC Accounting Podcast wherever you listen to your podcasts. And to stay up to date on all our latest accounting and reporting news, sign up for our newsletter at viewpoint.pwc.com. From Thought Leadership at PWC, I'm Heather Horn. Thanks for tuning in.
SPEAKER_00This podcast is brought to you by PWC, All Rights Reserved. PwC refers to the U.S. member firm or one of its subsidiaries or affiliates, and they sometimes refer to the PWC network. Each member firm is a separate legal entity. Please see www.pwc.com slash structure for further details. This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors, including accountants and lawyers.
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