The IMA® (Institute of Management Accountants) Financial Reporting Committee (FRC or Committee) issued a comment letter in response to the Financial Accounting Standards Board (FASB) Proposed Accounting Standards Update (ASU) No. 2021-001, Interim Reporting (Topic 270): Disclosure Framework—Changes to Interim Disclosure Requirements (Proposal).
In its comment letter, the FRC supports the FASB’s intention to adopt a principles-based approach to interim disclosure requirements. The Committee vies this approach as aligned with the U.S. Securities & Exchange Commission’s approach that considers interim reporting an update to an entity’s most recent annual financial statements rather than a discrete reporting period. The Committee also supports the elimination of certain phrases in the Codification (such as “for each period presented”) because elimination of these phrases will allow for clarity in applying the principle.
The FRC notes that some recent FASB standards have deviated from this model by establishing new and detailed interim reporting requirements that are also inconsistent from topic to topic. In addition, the Committee suggests that the FASB reconsider the suggested list of items at proposed FASB ASC 270-10-50-17, which appears to be expansive rather than limited to the most critical items and in contradiction to the concept of principles-based guidelines for interim reporting.