Article

FASB finalizes interim reporting rules, clarifies terms for public and private companies

Jul 01, 2025

The FASB voted 6 to 1 on June 18, 2025, to finalize proposed new rules for interim reporting, aiming to clarify and consolidate existing requirements rather than changing practices for public and private companies in general. Board member Frederick Cannon was the dissenting vote.

The board reiterated that the revisions are not intended to change current practices but to clarify, organize, and improve the understandability and navigability of interim reporting requirements under Topic 270. However, practical changes to the proposal are that private companies will have a clear interim reporting principle and won't be required to present comparative statements or follow SEC rules directly, according to the discussions. The final wording of the rules is especially critical.

"I recognize that words matter," said FASB Chair Richard Jones. "And I'm sure we'll receive great feedback in our confidential review process as to whether or not we can hit the mark with this."

The new rules will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public companies, and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for private companies. "That's a long time to do what should be nothing," said FASB member Christine Botosan.

The board's decisions mean that Proposed Accounting Standards Update (ASU) No. 2024-ED600, Proposed Accounting Standards Update, Interim Reporting (Topic 270): Narrow-Scope Improvements, will be revised and finalized. The final standard might be issued in the fourth quarter of this year. Early adoption will be permitted for interim financial statements.

Cannon's reasons for dissenting

Interim reporting refers to the presentation of financial statements in periods shorter than a full fiscal year, typically quarterly or semi-annually. Analysts especially rely on the information to track the financial operations of companies on a quarterly basis.

Cannon, one of two analysts on the FASB, dissented to the rules because he believes the methodology for identifying required interim disclosures is too restrictive and could result in the loss of important information for investors. He stated that the project missed an opportunity to modernize interim reporting for today's capital markets, emphasizing that the potential costs to investors outweigh the benefits of improved clarity and organization for preparers and auditors.

"In the capital markets today, while I think much of what we have here is very appropriate for private companies, and maybe even some small public companies that don't trade actively, interim periods are considered by the capital markets a discrete period. That's what moves the stock," Cannon said. "That's what investors are looking at, and I think it would behoove us to take into account the way that the capital markets operate today when we consider interim financial reporting in the future."

Transition option allowed

The provisions will be able to be applied prospectively or, optionally, retrospectively, according to the discussions. A majority of the board agreed that since the amendments are about disclosure, companies could generally disclose more if they wished, and that allowing both options makes sense.

Under the provisions, public companies will continue to be required to follow SEC (Regulation S-X, Rule 10-01 and 8-03) for form, content, and comparative information (i.e., current and prior period information) in interim financial statements and notes. The guidance in Topic 270, Interim Reporting, will reference these SEC rules rather than restating them, to avoid conflicts and maintain consistency. Topic 270 will include a clarified list of interim disclosure requirements and disclosure principles, but these are not intended to add new disclosures for public companies. The list won't be exhaustive; companies must also consider event-driven disclosures and other requirements in the codification.

Neither public nor private companies will have to present comparative interim financial statements.

Further, for private companies that file financial statements using Generally Accepted Accounting Principles (GAAP), the board pulled back on language that was concerning to some, highlighting the intention to clarify and codify current practices.

Specifically, instead of referring private companies directly to SEC rules as some accountants feared, Topic 270 will include a summary of acceptable forms of interim financial statements and notes, making it easier for private companies to understand what is required.

"Coming into this meeting, I had a concern that we direct, other than SEC registrants, to SEC guidance. I don't know that we have a practice of doing that typically, and with the lack of familiarity they have with S-X, I just didn't think it was necessarily a best-in-class solution," FASB member Susan Cosper said. "And particularly, it could be burdensome, like many of the respondents said, since they don't really actually even have this level of prescription on an annual basis for their statements."

We have partnered with Thomson Reuters to issue our monthly Accounting Insights. Please contact Baker Tilly if you have any questions related to these articles or Baker Tilly's Accounting and Assurance Services. ©2025 Thomson Reuters/Tax & Accounting. All Rights Reserved.

© 2025 Baker Tilly US, LLP