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New FASB guidance standardizes interim reporting, facing internal dissent over scope
Jan. 1, 2026
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Article
Jan. 1, 2026
U.S. accounting rule makers at the Financial Accounting Standards Board (FASB) moved on Dec. 8, 2025, to untangle decades of complex interim reporting rules, issuing new guidance designed to standardize disclosures for all companies, from Wall Street giants to smaller private firms and clarify when they apply.
The board published new Accounting Standards Update No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which aims to improve the navigability and clarity of interim financial statements.
"The ASU clarifies the applicability of the interim reporting guidance, the types of interim reporting and the form and content of interim financial statements in accordance with generally accepted accounting principles (GAAP)," FASB Chair Richard Jones said in a statement, adding, "We expect these clarifications will enhance consistency in interim reporting for all entities."
For years, accountants have voiced concerns over the complexity and inconsistent application of interim reporting guidance, largely due to its piecemeal development since its origins in 1973. This fragmented evolution meant that guidance on what to disclose and when often resided in various, disconnected parts of the accounting standards, requiring preparers to piece together requirements from different sources. This lack of a clear, centralized roadmap made it challenging for entities to ensure consistent and accurate interim reporting, leading to inefficiencies and potential for varied interpretations across different companies.
The ASU aims to streamline existing requirements, rather than introduce sweeping new disclosure mandates, by:
The changes are set to take effect for public business entities for interim reporting periods within annual periods beginning after Dec. 15, 2027. Other entities, including private companies, will have until interim periods within annual periods beginning after Dec. 15, 2028.
Early adoption is permitted for all entities, and companies can choose to apply the amendments either prospectively or retrospectively.
While the ASU received an affirmative vote from five members of the FASB, it was met with dissent from board members Christine Botosan and Frederick Cannon. The majority argued that the amendments enhance clarity, consistency and assist in future standard-setting by organizing interim disclosure requirements. They also noted that the disclosure principle is crucial for timely investor information on material events and that the costs of implementation are not expected to be significant, as the update primarily clarifies existing rules.
However, Botosan and Cannon voiced concerns that the methodology used to create the disclosure list was too narrow and might not be comprehensive enough to reflect current practice. They warned that this could potentially lead to a reduction in the vital interim information relied upon by investors. The dissenting members advocated for a more expansive re-evaluation of interim reporting, particularly for publicly traded companies, arguing that the project represents a "missed opportunity" to better align interim disclosures with how capital markets utilize such information for monitoring financial performance. They believe the view of interim statements as merely an "update" to annual statements is outdated given current market realities.
The FASB stated that it does not anticipate significant costs for entities, emphasizing that the amendments primarily clarify existing GAAP and SEC requirements, rather than creating new ones.
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