Adopting new accounting standards is essential for companies striving to uphold financial integrity and maintain a competitive edge. By proactively aligning with these standards, businesses can improve transparency, boost investor confidence, and make informed financial decisions. CohnReznick is here to support you through these changes, enabling your organization to remain compliant and strategically positioned for future growth.

Below is a list of selected Accounting Standards Updates (ASUs) effective in 2025, as well as IFRS and SEC updates. This list is not exhaustive; for more detailed information, explore our matrix of FASB amendments and effective dates to understand potential impact on your accounting and financial reporting.

Accounting Standards Updates (ASUs)

ASU 2023-08 (October 2023): Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60)

Effective for fiscal years beginning after Dec. 15, 2024, including interim periods. Early adoption is permitted.

What you need to know:

• The ASU requires reporting entities to measure certain crypto assets at fair value with changes recognized in net income.
• Crypto assets must be presented separately from other intangible assets on the balance sheet. 
• Gains and losses from fair value changes must be shown in net income separately from other income statement items.
• Previously, crypto assets were accounted for as indefinite-lived intangible assets, requiring impairment testing when the fair value fell below cost. This ASU eliminates that cost-less-impairment model, reducing complexity and aligning accounting with the nature of these assets.

Your next steps:

• Identify any crypto assets held and assess the impact of fair value measurement.
• Update financial disclosures and internal controls to help ensure compliance.
• Train the company’s staff on how to apply the guidance going forward and any implications of ASU 2023-08 specifically applicable to the company.

ASU 2023-09: Income Taxes (Topic 740)

Effective for fiscal years beginning after Dec. 15, 2024, with early adoption allowed. 

What you need to know:

• Enhances income tax disclosures to respond to investor demands for a higher level of consistency in disclosures among entities and more detail on taxes paid by jurisdiction.
• Public business entities (PBEs) must provide a significantly expanded tabular reconciliation of their effective tax rate (ETR) to statutory tax rate, showing both percentage and dollar amounts.
• The expanded ETR reconciliation of PBEs shall include the following eight specified categories and, in some cases, an “Other” category for items that do not fit in any of the eight specified categories:

1. State and local income taxes (net of federal impact)

2. Foreign tax effects

3. Tax law or rate changes

4. Effect of cross-border tax laws

5. Tax credits

6. Valuation allowance changes

7. Nondeductible and nontaxable items

8. Unrecognized tax benefits changes

• Categories 2, 4, 5, and 7 will require further disaggregation when an individual reconciling item equals or exceeds a threshold of 5%. This threshold is determined by multiplying the income (loss) from continuing operations before tax by the applicable statutory federal (or national) income tax rate and by 5%.
• Categories 4 and 5 will be further disaggregated by nature of the reconciling item.
• Both private entities and PBEs must disclose income taxes paid, broken down by federal, state, and foreign jurisdictions in their annual financial statements, to the extent taxes paid to each such jurisdiction exceed 5% of total income taxes paid for the year.

Your next steps:

• Review and update disclosures: Modify existing tax disclosures to align with the new format.
• Enhance data collection processes: Implement internal systems to track tax data at the required level of granularity.
• Educate stakeholders: Train finance and tax teams on the new reporting requirements.

ASU 2024-03 (November 2024): Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)

Effective for fiscal years beginning after Dec. 15, 2025, including interim periods.

What you need to know:

• The new ASU 2024-03 is intended to address requests from investors for more detailed information about the types of expenses in commonly presented expense captions on the face of the statement of operations of PBEs, such as “selling, general and administrative,” “cost of sales,” and “research and development.”
• Enhances transparency in financial reporting by requiring PBEs to disclose detailed information about specific income statement expenses.
• PBEs must provide, in a tabular format, detailed disclosures of certain expense categories included in each relevant income statement line item. 
• Expenses to be disaggregated include (a) Employee compensation, (b) Depreciation of property, plant, and equipment, (c) Amortization of intangible assets, (d) Inventory expenses, (e) External fees for services and interest costs.

Your next steps:

• Determine how the updated disclosure rules impact external financial reporting.
• Implement necessary changes in US GAAP financial statement disclosures.
• Train the company’s staff on how to apply the guidance going forward and any implications of the ASU 2024-03 specifically applicable to the company.

ASU 2024-04 (December 2024): Debt with Conversion and Other Options (Subtopic 470-20)  

Effective for fiscal years beginning after Dec. 15, 2025. Early adoption is permitted.

What you need to know:

• This update clarifies the accounting treatment for certain settlements of convertible debt instruments, specifically addressing when such settlements should be accounted for as induced conversions rather than debt extinguishments.
• Criteria for Induced Conversion Accounting: 
  • The conversion occurs under changed conversion privileges that are exercisable only for a limited period. 
  • The inducement offer should preserve the form and amount of consideration issuable under the original conversion terms. 
  • The convertible debt instrument must have contained a substantive conversion feature both at issuance and at the date the inducement offer is accepted. 
• Measurement of inducement expense: If a settlement qualifies as an induced conversion, the issuer recognizes an inducement expense. This expense is measured as the fair value of all securities and other consideration transferred in excess of the fair value of the securities and other consideration issuable under the original conversion terms. 

Your next steps:

• Review all convertible debt agreements and determine if any modifications qualify as induced conversions.
• Adjust financial reporting policies to help ensure alignment with the new guidance.
• Train the company’s staff on how to apply the guidance going forward and any implications of ASU 2024-04 specifically applicable to the company.

IFRS Updates

March  2024 IFRS Interpretations Committee Update

What you need to know:

• The IFRS Interpretations Committee issued agenda decisions on topics including climate-related commitments under IAS 37 and payments contingent on continued employment during handover periods under IFRS 3. (Note: The committee published additional clarifications on these topics in April 2024.) 
• Addresses climate-related commitments under IAS 37, clarifying when provisions should be recognized for such commitments.
• Provides guidance on payments contingent on continued employment during handover periods under IFRS 3, impacting business combinations.
• Helps companies interpret IFRS standards more consistently in complex scenarios.

Your next steps:

• Assess the impact of climate-related commitments on financial statements.
• Review business combination agreements to confirm correct treatment of contingent payments.
• Update internal accounting policies and procedures to reflect these clarifications.

IFRS 18 – Presentation and Disclosure in Financial Statements (May 2024)

IFRS 18 is effective for annual reporting periods beginning on or after Jan. 1, 2027.

What you need to know:

• Introduces new requirements for categorizing and presenting financial performance:
  • Defined Subtotals in the Statement of Profit or Loss: Operating Profit – A newly defined subtotal representing the profit derived from an entity’s main business activities, providing a clearer picture of core operational performance. 
  • Profit Before Financing and Income Taxes: This subtotal offers insight into an entity’s performance before the effects of financing and tax expenses, enhancing comparability across entities. 
• Disclosure of Management Performance Measures (MPMs): Financial metrics defined by management that depict aspects of financial performance not specified by IFRS. This includes a reconciliation of these measures to the most directly comparable IFRS-defined totals or subtotals.
• Enhanced Aggregation and Disaggregation: IFRS 18 emphasizes the need for appropriate aggregation and disaggregation of information in financial statements, helping to ensure that line items and subtotals provide relevant insights without obscuring material details.

Your next steps:

• Review current financial statement structures to help ensure compliance.
• Modify internal reporting processes to meet new disclosure requirements.
• Train the company’s staff on new presentation rules and on how to apply the guidance going forward and any implications of the IFRS update applicable to the company.

Amendments to IFRS 9 and IFRS 7 – Classification and Measurement of Financial Instruments:

These amendments will be effective for annual reporting periods beginning on or after Jan. 1, 2026.

What you need to know:

• Provides clarifications on ESG-linked financial assets and their classification. It provides guidance on how to assess contractual cash flows of financial assets with ESG. Specifically, they clarify how ESG-linked features in loans affect whether these loans are measured at amortized cost or fair value.
• Addresses the accounting treatment for electronic payments in settling liabilities. Clarifications have been made regarding the derecognition requirements in IFRS 9 concerning the settlement of financial assets or liabilities through electronic cash transfers. The amendments specify the date on which a financial asset or liability should be derecognized in such scenarios.
• Enhances disclosure requirements to improve investor transparency. New disclosures have been introduced for financial instruments with contingent features. Additionally, there are added disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).

Your next steps:

• Assess the impact of ESG-linked financial instruments on classification and reporting.
• Update financial statements to reflect electronic payment settlements.
• Confirm compliance with the new disclosure guidelines for financial instruments.

IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information; IFRS S2: Climate-related Disclosures

IFRS S1 and S2 are effective for annual reporting periods beginning on or after Jan. 1, 2024.

What you need to know:

• IFRS S1: Companies must disclose sustainability-related risks and opportunities that could impact their financial performance over various time horizons. Disclosures should include information on how sustainability-related issues are governed and integrated into the company’s strategy and risk management processes. Companies need to provide specific metrics and targets related to sustainability to help stakeholders assess their performance and progress.
• IFRS S2: Companies must identify and disclose physical and transition risks related to climate change that could affect their business. Disclosures should detail how climate-related risks and opportunities are incorporated into the company’s strategy and financial planning. Companies are required to report on climate-related metrics, such as greenhouse gas emissions, to provide a clear picture of their climate impact and mitigation efforts.

Your next steps:

• Assess which sustainability and climate-related standards are applicable to the company based on its industry, operations, and geographic location.
• Gather necessary data and information related to sustainability and climate risks, opportunities, and performance metrics. 
• Prepare comprehensive and accurate disclosures that meet the standards, making sure they are integrated into the company’s financial reporting processes.
• Provide ongoing support and guidance to make sure the company remains compliant and can effectively manage sustainability and climate-related risks and opportunities.

Lack of Exchangeability (Amendments to IAS 21)

Amendments effective Jan. 1, 2025.

What you need to know:

• Introduces guidance on determining an exchange rate when a currency lacks exchangeability.
• Helps entities report financial results more accurately in economies with currency restrictions. 
• Aims to enhance comparability in financial reporting. 

Your next steps:

• Identify transactions involving currencies with exchange restrictions.
• Adjust currency translation policies in financial reporting.
• Train finance teams on the new exchangeability framework.

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures

The effective date for this amendment was deferred indefinitely. Early adoption continues to be permitted.

What you need to know:

• The amendments to IFRS 10 and IAS 28 address the sale or contribution of assets between an investor and its associate or joint venture. These amendments were issued to resolve an inconsistency between the requirements in IFRS 10 and IAS 28.
• Full Gain or Loss Recognition: When a transaction involves assets that constitute a business, as defined in IFRS 3 Business Combinations, the entire gain or loss should be recognized. 
• Partial Gain or Loss Recognition: If the assets do not meet the definition of a business, the gain or loss should be recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. 

Your next steps:

• Review existing accounting policies for transactions involving the sale or contribution of assets between an investor and its associate or joint venture to confirm they align with current standards.
• Although the amendments are deferred, entities should consider the potential impact of full or partial gain/loss recognition on future transactions and plan accordingly.
• Communicate with auditors, investors, and other stakeholders about the current status of these amendments and any anticipated changes to financial reporting practices.

SEC Updates

Staff Accounting Bulletin No. 122 (Jan. 23, 2025)

This update became effective on Jan. 30, 2025.

What you need to know:

• SAB 122 rescinds the SEC staff interpretive guidance in SAB 121 (codified in Section FF of Topic 5 in the Staff Accounting Bulletin Series) on accounting and disclosing obligations to safeguard crypto assets for SEC filers and replaces it with new guidance that defers to existing sections within the FASB ASC and disclosure instructions within Items 101, 105, and 303 of Regulation S-K.
• It requires SEC filers with obligations to safeguard crypto assets for others to determine whether to recognize, and how to measure, a liability related to the risk of loss under such an obligation in accordance with FASB, ASC Subtopic 450-20, Loss Contingencies, or IAS 37, Provisions, Contingent Liabilities, and Contingent Assets, if reporting under U.S. GAAP and IFRS Accounting Standards, respectively.
• SEC filers should apply the new SAB 122 staff guidance on a fully retrospective basis in annual periods beginning after Dec. 15, 2024.
• Entities may elect to apply the guidance in any earlier interim or annual financial statement period included in filings with the Commission after the effective date, which is Jan. 30, 2025. 

Your next steps:

• Understand the changes and the rescission of Topic 5.FF and determine how the rescission affects your company’s financial reporting, especially if you have obligations to safeguard crypto assets for others.
• Evaluate whether you need to recognize a liability related to the risk of loss under such an obligation. If so, apply the recognition and measurement requirements for liabilities arising from contingencies in accordance with FASB ASC Subtopic 450-20 or IAS 37.
• Adjust financial statements for all prior periods presented to remove amounts recognized in prior comparative financial statements due to the application of SAB 121. Include clear disclosures about the effects of the accounting changes in accordance with paragraphs 250-10-50-1 to 50-3 and IAS 8.

Statement on the Application of IFRS 19, Subsidiaries Without Public Accountability: Disclosures, in Filings with the SEC (May 17, 2024)

The update will be effective from Jan. 1, 2027. Early adoption is permitted.

What you need to know:

• IFRS 19 allows certain subsidiaries of reporting companies to provide reduced disclosures while still complying with IFRS Accounting Standards.
• Even though IFRS 19 is intended for entities without public accountability, additional material disclosures may be required in SEC filings to help ensure that the financial statements are not misleading.
• The scope of IFRS 19 is limited to entities that do not have public accountability at the end of their financial statement reporting period. However, there may be situations where financial statements applying IFRS 19 are included in SEC filings.
• The SEC emphasizes the importance of providing high-quality financial information to investors, which may necessitate additional disclosures beyond those required by IFRS 19. 

Your next steps:

• Understand the reduced disclosure requirements and the conditions under which they apply. Determine if your subsidiary qualifies for the reduced disclosures under IFRS 19.
• Identify any additional material disclosures that may be necessary to make sure the financial statements are not misleading when included in SEC filings. Engage with accounting professionals or legal advisors to interpret the requirements and confirm compliance.
• Draft financial statements that comply with IFRS 19 and include any additional disclosures required by the SEC. Make sure that the financial statements are included in the relevant SEC filings and meet all regulatory requirements.

Climate-Related Disclosures (March 6, 2024)

For Large Accelerated Filers: Effective fiscal years ending on or after Dec. 15, 2025. 

For Accelerated Filers: Effective fiscal years ending on or after Dec. 15, 2026. 

For Non-Accelerated Filers and Smaller Reporting Companies: Effective fiscal years ending on or after Dec. 15, 2027.

What you need to know:

• Enhances and standardizes climate-related disclosures for public companies.
• Requires companies to disclose material climate-related risks, their governance, and financial impact.
• For large accelerated filers and accelerated filers, material Scope 1 and Scope 2 greenhouse gas (GHG) emissions must be disclosed, subject to assurance requirements that will be phased in.
• Certain disclosures related to severe weather events and other natural conditions must be included in financial statements.

Your next steps:

• Assess the organization’s exposure to climate-related risks. Identify and document governance processes for climate risk management.
• Develop systems to track and report Scope 1 and 2 emissions. 
• Prepare disclosures in financial statements to comply with the rule.

How we can help 

CohnReznick’s CFO Advisory Practice offers comprehensive and impactful support to the office of the CFO. We assist companies in maintaining a regulatory-compliant, effective, and efficient accounting and reporting function.