Small Business Advisory Committee (SBAC)


May 12, 2022

The Small Business Advisory Committee (SBAC) met virtually on May 12, 2022. At the meeting, the SBAC members provided input on the following topics:
  • Disaggregation—Income Statement Expenses: SBAC members provided feedback on potential alternatives to the disaggregation of certain expense captions to improve the decision usefulness of companies’ income statements. SBAC members noted that the unique business models of individual companies create inherent challenges when attempting to consistently define expense categories. Some members explained that a principles-based approach could lead to diversity in practice and reduce comparability. Therefore, some members expressed a preference for prescriptive requirements. Members also noted that a quantitative threshold should be clearly and consistently defined and considered in conjunction with qualitative factors.
  • Accounting for and Disclosure of Intangibles: SBAC members provided feedback on the pervasiveness, challenges, and potential ways to improve the accounting for and disclosure of intangibles. Members agreed that there is a disparity with the current accounting guidance that requires costs related to internally generated intangibles, including research and development, to be expensed as incurred, while acquired intangible assets are capitalized. One member noted that moving to a capitalization model for development expenses could improve comparability in this area. Members also stated that there is a disparity in current accounting guidance for development costs of internal and external use software. Members suggested that development costs for software that is revenue generating, including hosted software arrangements, should follow one model, while development costs for software developed strictly for internal use should follow a separate model. Members mentioned that the increased use of agile methodologies for software development introduces challenges under the current accounting models.
  • Accounting for Government Grants, Invitation to Comment: FASB staff educated SBAC members on the objective of the research project on the accounting for government grants. Some SBAC members observed that companies often analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, to account for government grants. Some members noted that a project on accounting for government grants is not a high priority in comparison with other topics on the Board’s technical agenda.
For more information about the SBAC, please visit the FASB website.

SBAC Meeting Recaps are provided for those interested in following the activities of the SBAC. Official positions of the SBAC are reached only after extensive due process and deliberations. More details on the SBAC’s input on the FASB’s projects can be found within the meeting minutes, which will be published on the FASB website in the coming weeks.