Q3 2026 Accounting and Financial Reporting Developments

During the third quarter of the 2026 calendar year, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2026-03, which provides a limited fair value measurement exception for investment companies holding equity securities subject to contractual sale restrictions. The FASB also issued three proposals: one addressing the evaluation and disclosure of certain digital assets as cash equivalents, one proposing 21 targeted improvements to the Accounting Standards Codification, and one proposing the inclusion of the value attributable to recapture when measuring residential mortgage servicing rights.

The Securities and Exchange Commission (SEC) announced leadership changes, outlined its 2026 regulatory agenda, and established a Financial Reporting and Accounting Unit within the Division of Enforcement. The SEC proposed frameworks for electronic delivery and certain crypto asset offerings, modernization of transfer agent rules, and rescission of the investment adviser pay-to-play rule. Other actions included discontinuing all Division of Corporation Finance no-action responses under Rule 14a-8, extending the Form PF amendments’ compliance date to July 1, 2027, updating Treasury clearing implementation guidance, beginning work on restructuring the Consolidated Audit Trail, and expanding nonpublic draft registration statement review accommodations for asset-backed securities issuers.

The Public Company Accounting Oversight Board (PCAOB) announced leadership developments involving its chief auditor and board and adopted targeted amendments to QC 1000, subject to SEC approval, while retaining the Dec. 15, 2026, effective date. The PCAOB also issued implementation questions and answers for QC 1000, sought feedback on its draft 2026-2030 strategic plan and standard-setting and research priorities, advanced inspections modernization, and revised Division of Enforcement staff settlement practices.

The American Institute of Certified Public Accountants (AICPA) issued Statement on Auditing Standards (SAS) No. 150 on external confirmations and approved SAS No. 151 on auditors’ responsibilities relating to fraud, both effective for audits of periods ending on or after Dec. 15, 2028. The AICPA also updated its digital assets practice aid and issued guidance addressing artificial intelligence in System and Organization Controls examinations.

The Center for Audit Quality (CAQ) submitted comment letters addressing SEC reporting proposals, QC 1000, and PCAOB priorities. The CAQ also published research on audit partners’ perspectives, institutional investors’ use of AI, and the interpretation of PCAOB inspection reports.

Checklists for the effective dates of FASB ASUs are provided in the appendix.