Small Business Advisory Committee (SBAC)
May 18, 2023
The Small Business Advisory Committee (SBAC) met on May 18, 2023, at the FASB’s offices. At the meeting, the SBAC members provided input on the following topics:
- Changing Business Practices and Emerging Accounting Issues: SBAC members broadly observed that there are resource challenges in the smaller public business environment and increasing costs of providing disclosures, including those that may result from the Board’s technical agenda projects. SBAC members also discussed topics including (1) the challenges of applying embedded derivative guidance to convertible debt instruments and debt instruments with environmental, social, and governance-linked features; (2) measuring certain crypto assets, particularly non-fungible tokens; 3) the increasing need for the standardization of key non-GAAP financial measures; and (4) potential accounting considerations for cash deposits and loans as a result of recent bank failures and the response by regulators. Overall, members agreed that the FASB’s current agenda is addressing the priority accounting areas in practice and did not identify any urgent matters that potentially would require standard setting.
- Improvements to Income Tax Disclosures: SBAC members provided feedback on the proposed Accounting Standards Update—Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Investor members agreed that the proposed disclosures would provide more transparency about income taxes and supported the proposed amendments. Some preparer members noted that although the data to prepare the rate reconciliation is available, there could be challenges in categorizing the reconciling items due to the interplay between different categories and applying materiality. Members also questioned the decision usefulness of disaggregating income taxes information based on a 5 percent threshold and the disaggregated information of income taxes paid at the state/local level. Preparer members noted that there would be incremental costs incurred by small businesses to provide the proposed disclosures, although most costs would be one-time costs of adoption rather than recurring costs.
- Accounting for and Disclosure of Crypto Assets: Members discussed the scope of proposed Accounting Standards Update—Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, and noted that a clearly defined scope is important for consistent application of the proposed changes. A member also expressed their support for the proposed prospective method of transition because it is more operable than a full retrospective transition. Several members noted that although crypto activity has not risen as quickly as some expected in 2023, some related crypto services (such as entities that convert crypto assets to cash) have experienced continued growth.
- Accounting for and Disclosure of Software Costs: FASB staff provided an update on the project. Members discussed potential indicators for the probable threshold that could be used in determining capitalization of software costs. Generally, members noted that such indicators would improve the operability compared to the current guidance. Members agreed that illustrative examples would be useful in showing how to account for software costs and investor members agreed that additional disclosures would be useful.
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 & 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.