August 2025 Financial Reporting, Governance, and Risk Management
Message from Sydney Garmong, Partner, National Office
It’s August, which means two things for Washington, D.C.: It’s hot and humid, and Congress has picked the right time to be in recess. With fall just around the corner, many students are heading back to school to prepare for future opportunities. We hope you are enjoying the tail end of summer.
With the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) last month, we are watching for proposed regulations from the federal banking agencies, the National Credit Union Administration, the U.S. Department of the Treasury, and state regulators. On Monday, Treasury issued a request for comment, as required under the GENIUS Act.
The American Institute of Certified Public Accountants (AICPA) has extended its early bird pricing for two of the largest conferences for our industry. Again, the AICPA banking conference and AICPA credit unions conference will occur concurrently, Sept. 15-17, 2025, at the Gaylord National Resort & Convention Center, National Harbor, Maryland, just south of Washington, D.C. Here are the discount codes:
- The 2025 national AICPA & CIMA Conference on Banks & Savings Institutions. Use the code “BAN25” to save $100 on the in-person or the virtual option. This discount may be applied in addition to the early bird discount of $150 – for a total savings of $250 off the regular registration fee – for those who register by Monday, Sept. 1, 2025.
- The 2025 AICPA & CIMA Conference on Credit Unions. Use the code “CU25” to save $100 on the in-person or the virtual option. This discount may be applied in addition to the early bird discount of $150 – for a total savings of $250 off the regular registration fee – for those who register by Monday, Sept. 1, 2025.
We hope to see you in September. We look forward to keeping you informed and welcome any feedback.
Financial Institutions Executive Briefing
Get updates on accounting, governance, risk management, and compliance issues.
From the federal financial institution regulators
CFPB reopens open banking rulemaking
On July 29, 2025, the Consumer Finance Protection Bureau (CFPB) filed a legal brief informing the federal district court in Kentucky that it will reconsider and substantially revise its 2024 open banking rule under Section 1033 of the Consumer Financial Protection Act. As reported by the National Law Review, the bureau intends to undertake new rulemaking with a “more robust justification,” prompting the court to stay litigation in the pending lawsuit (Forcht Bank v. CFPB).
CFPB withdraws final rule on notifications for state attorneys general
On July 21, 2025, the CFPB withdrew a direct final rule that would have eliminated the requirement for state attorneys general to notify the CFPB before initiating consumer financial law enforcement actions. Originally intended to streamline enforcement coordination, the proposal was withdrawn following significant public opposition. The CFPB cited the volume of adverse comments as the reason for retaining the notification requirement under Section 1082.1 of the Consumer Financial Protection Act.
FinCEN issues notice for suspicious activity involving virtual currency kiosks
On Aug. 4, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a notice urging financial institutions to stay alert for suspicious activity involving convertible virtual currency kiosks, which are increasingly exploited by criminals for fraud, cybercrime, and drug trafficking. The notice highlights rising scam trends, such as tech support and bank impersonation scams, especially those affecting older adults, and emphasizes institutions’ obligations under the Bank Secrecy Act to detect, report, and mitigate such illicit activities.
NCUA board meeting focuses on AI and CLF
On July 24, 2025, the National Credit Union Administration (NCUA) board meeting featured a briefing on credit unions’ use of AI and the agency’s evolving oversight approach. NCUA staff announced the launch of a new AI resources page and clarified that any future supervisory expectations related to AI would require formal rulemaking. The board also reviewed second-quarter updates on the Central Liquidity Facility (CLF), including trends in membership and liquidity capacity, and received results from the NCUA ombudsman’s post-exam credit union survey, which reflected generally positive feedback with suggestions for improved examiner communication.
Fed resignation leaves a vacancy
On Aug. 1, 2025, Federal Reserve Board (Fed) Gov. Adriana D. Kugler submitted her resignation, effective Aug. 8, and said she plans to return to academia. Kugler’s departure after only 10 months leaves a vacancy for the Trump administration to fill. Chair Jerome Powell praised Kugler’s service and “impressive experience,” noting her contributions on committees for financial stability and smaller regional banks.
Fed and FDIC release public sections of resolution plans
On Aug. 5, 2025, the Fed and the Federal Deposit Insurance Corp. (FDIC) released the public sections of resolution plans for the eight largest and most complex domestic banking organizations and 56 foreign banking organizations. Resolution plans, commonly known as living wills, are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. These plans describe a banking organization’s strategy for orderly resolution under bankruptcy in the event of material financial distress or failure.
Fed says FedNow adoption expands
On July 16, 2025, the Fed announced that the FedNow instant payments service continues to grow. The network had more than 1,400 participating institutions by its two-year anniversary, on July 20, 2025.
OCC updates BAAS
On Aug. 15, 2025, the Office of the Comptroller of the Currency (OCC) released its annual update to the Bank Accounting Advisory Series (BAAS), which covers a variety of topics and promotes consistent application of accounting standards among national banks and federal savings associations. The BAAS is updated annually to address accounting questions, newly issued and updated accounting standards, and emerging issues observed through March 31. This edition of the BAAS does not include new questions or substantive updates to existing questions; however, the OCC has made edits to improve general clarity, including revision, relocation, and renumbering of certain existing entries. The OCC noted that these edits do not alter prior conclusions or interpretations from prior editions.
The BAAS does not represent official rules or regulations of the OCC. Rather, it represents the OCC’s Office of the Chief Accountant’s interpretations of GAAP and regulatory guidance based on the facts and circumstances presented. While the BAAS is published by the OCC, the information in the BAAS is relevant to all financial institutions.
Other activities affecting financial services policy
GENIUS Act creates stablecoin regulatory framework
On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) was signed into law, creating a federal regulatory framework for payment stablecoins in the United States. The legislation introduces a dual charter system, authorizes select entities to issue stablecoins, mandates 1-to-1 asset backing, requires Public Company Accounting Oversight Board (PCAOB)-registered attestation, and sets compliance standards for anti-money laundering and consumer protections. It clarifies that stablecoins are neither securities nor commodities, placing them under banking regulators’ oversight. The law directs federal and state banking agencies to begin joint rulemaking and oversight coordination, with final rules to be published within one year after the law goes into effect. As implementation begins, financial institutions must shift from observation to strategic planning, evaluating their roles in the evolving digital payments landscape.
For more information, see the Crowe articles “GENIUS Act: A Defining Moment for Stablecoin Regulation” and “Payment Stablecoins: What You Need To Know.”
Treasury issues request for comment related to GENIUS Act
On Aug. 18, 2025, the U.S. Department of the Treasury issued a request for comment as required by the GENIUS Act. The request focuses on the use of innovative methods to detect and mitigate illicit finance risks associated with digital assets.
Comments are due Oct. 17, 2025.
From the Financial Accounting Standards Board (FASB)
FASB announces roundtable on leases implementation
The FASB will host a public roundtable on Sept. 12, 2025, as part of its Post-Implementation Review of Topic 842, “Leases.” The session will gather feedback from investors, preparers, auditors, and other stakeholders on the standard’s costs, benefits, implementation challenges, and ongoing application. The event will be held at FASB’s Norwalk, Connecticut, offices, streamed on its website, and archived for one year.
FASB releases Investor Outreach Report
On July 31, 2025, the FASB released its 2025 Investor Outreach Report, listing the FASB’s efforts to incorporate investor feedback in its standard-setting process. In the year ending June 30, 2025, the FASB engaged with more than 400 investors, bringing the total to more than 2,100 interactions since 2021. It delivered final standards on digital assets and financial reporting disaggregation and worked on standards for software costs, government grants, derivatives, hedge accounting, and interim reporting.
The report also underscores the pivotal role of the Investor Advisory Committee, which welcomed two new members in 2025. Input from approximately 200 stakeholders, gathered through the January 2025 agenda consultation invitation to comment, continues to shape the FASB’s strategic priorities, reinforcing its commitment to transparency and investor-centric standard making.
FASB updates CECL guidance for accounts receivable and contract assets
On July 30, 2025, the FASB issued Accounting Standards Update (ASU) 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” While this standard is unlikely to affect financial institutions, it might have an impact on the financial statements of an institution’s borrowers.
This update introduces a practical expedient, available to all entities, that allows them to assume that current economic conditions as of the balance sheet date remain unchanged over the asset’s remaining life when estimating expected credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 606, “Revenue From Contracts With Customers.” In addition, entities other than public business entities that elect the practical expedient may also adopt an accounting policy election permitting consideration of post-balance sheet cash collections when estimating credit losses.
The ASU is effective for annual and interim periods beginning after Dec. 15, 2025, with early adoption permitted, and must be applied prospectively.
For additional information, see the Crowe article “FASB Simplifies Credit Losses for Accounts Receivable and Contract Assets.”
From the Securities and Exchange Commission (SEC)
SEC solicits candidates for PCAOB board
On July 23, 2025, SEC Chair Paul Atkins announced the selection process for five seats on the PCAOB board, including the chair. The terms for these roles are staggered, with the earliest expiring in October 2026 and the latest extending through October 2030.
Candidate submissions are due by Aug. 25, 2025.
CorpFin updates C&DIs on beneficial ownership reporting
On July 11, 2025, the Division of Corporation Finance (CorpFin) updated several Compliance and Disclosure Interpretations (C&DIs) related to Exchange Act Sections 13(d) and 13(g), and Regulation 13D-G. The revisions clarify beneficial ownership reporting expectations.
DTM issues FAQ on Treasury clearing requirements
On Aug. 6, 2025, the Division of Trading and Markets (DTM) published a new FAQ addressing broker-dealer inquiries related to amendments under the customer protection rule related to the clearing of Treasury securities.
SEC encourages review of FASB guide for expense disaggregation
The SEC on July 28, 2025, urged investors, filers, analysts, software providers, and all interested parties to review and comment on the FASB’s proposed Taxonomy Implementation Guide, “Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” It illustrates how to model disaggregated income statement expenses based on the 2025 GAAP Financial Reporting Taxonomy and is part of improving the process of creating and using XBRL-structured financial statements.
Comments are due Sept. 19, 2025.
SEC forms AI task force
On Aug. 1, 2025, the SEC announced the formation of an agencywide Artificial Intelligence Task Force, to be led by Chief AI Officer Valerie Szczepanik. The initiative is designed to harness AI tools to enhance operational efficiency, support innovation, and improve the agency’s execution of its regulatory mission.
SEC leadership endorses GENIUS Act
On July 18, 2025, President Donald Trump signed the GENIUS Act into law. It drew supportive statements from SEC leadership. Atkins called the legislation “a monumental step forward,” citing its potential to modernize financial infrastructure through improved efficiency and transparency. He also encouraged staff to consider additional guidance or rulemaking to facilitate the use of payment stablecoins for settlement and margin in securities markets.
Commissioner Hester Peirce described the law as “an important milestone to bring regulatory clarity to crypto.” Peirce emphasized that this regulatory clarity is essential to fostering innovation and protecting users. She encouraged SEC registrants to engage with the task force to ensure they can effectively and safely serve customers interacting with stablecoins.
SEC reaffirms commitment to coordination through President’s Working Group
On July 30, 2025, Atkins issued a statement highlighting the SEC’s ongoing participation in the President’s Working Group. He expressed support for its recommendations aimed at advancing a unified federal framework for digital asset regulation. The report, developed through interagency collaboration, outlines a road map aligned with Trump’s directive to position the U.S. as a global leader in crypto innovation.
SEC allows in-kind creations, redemptions for crypto ETPs
On July 29, 2025, the SEC approved orders permitting in-kind creations and redemptions for crypto asset exchange-traded products (ETPs). This change aligns crypto ETPs with traditional commodity-based ETP mechanics, reduces transaction costs, and enhances operational efficiency.
Crypto task force engages startups nationwide
The SEC’s Crypto Task Force launched a series of regional roundtables beginning Aug. 4, 2025, targeting small crypto startups with fewer than 10 employees and less than two years in operation. Led by Peirce, the initiative aims to broaden stakeholder input and inform future digital asset policy.
CorpFin offers clarity on liquid staking
On Aug. 5, 2025, CorpFin issued a staff statement clarifying that certain liquid staking arrangements and associated tokens, such as staking receipt tokens, do not constitute securities under federal securities laws. The guidance offers additional regulatory clarity for decentralized finance (DeFi) market participants. While Peirce supported the staff’s position and encouraged continued dialogue on legal questions surrounding staking, Commissioner Caroline Crenshaw expressed concern that the guidance “only muddies the waters” and called for further analysis.
From the Public Company Accounting Oversight Board (PCAOB)
PCAOB highlights auditor ethical responsibilities
On July 22, 2025, the PCAOB published “Investor Bulletin: The Importance of Auditor Professional Responsibilities and Ethics,” emphasizing the essential role of auditors in maintaining trust in financial reporting. It highlights the core ethical principles of independence, objectivity, integrity, professional judgment, and professional skepticism as fundamental to audit quality. The bulletin also explains how the PCAOB’s oversight through standard-setting, inspections, and enforcement protects investors.
From the American Institute of CPAs (AICPA)
AICPA issues exposure draft on auditor responsibilities related to fraud
On July 1, 2025, the AICPA released an exposure draft of a proposed Statement on Auditing Standards (SAS), “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.” This proposed update seeks to enhance and clarify the auditor’s role in identifying and responding to fraud during the audit process. The exposure draft introduces several notable revisions, including the establishment of mandatory procedures auditors must follow when fraud or suspected fraud is identified. Additionally, it reinforces the importance of maintaining professional skepticism throughout the audit engagement, a foundational element in the auditor’s approach to fraud risk.
Comments are due Oct. 3, 2025.
From the Center for Audit Quality (CAQ)
CAQ explores investor views on fraud
On July 29, 2025, the CAQ published the results of the institutional investor survey conducted by KRC Research in April 2025, which focused on fraud. The survey reveals growing concern among investors regarding fraud risks at U.S. public companies. Most investors perceive fraud as a significant and ongoing threat to corporate integrity and shareholder value. Internal audit teams, corporate management, and boards of directors are seen as the key lines of defense, with internal audit viewed as carrying the primary responsibility. When fraud does occur, senior management is most often held accountable. Investors cite a need for stronger deterrents, emphasizing enhanced employee training, ethical corporate cultures, and greater use of advanced technologies like artificial intelligence and machine learning to improve detection efforts. There is a prevailing sense that fraud has become more prevalent in recent years, and that it will continue to rise. Cyber-related threats, in particular, are seen as both the most likely and most damaging forms of fraud facing companies today.
CAQ analyzes recent SEC and PCAOB enforcement actions
The CAQ announced the release of a recent analysis by the Anti-Fraud Collaboration which reviewed more than 400 enforcement actions from 2021 through 2024 to highlight areas of regulatory focus. The report reveals sustained scrutiny around revenue recognition, M&A-related accounting, ethical breaches, and compliance practices.
Highlights include:
- Revenue recognition remains the top enforcement area (33% of SEC, 27% of PCAOB actions), with executives frequently held accountable.
- Post-merger accounting is a growing PCAOB concern, especially acquisition accounting and goodwill impairment.
- Severe penalties are increasingly imposed for violations tied to auditor integrity and misconduct.
- Regulatory sweeps target widespread compliance failures, including poor audit committee communication and off-channel messaging.
Portions of AICPA materials reprinted with permission. Copyright 2025 by AICPA.
FASB materials reprinted with permission. Copyright 2025 by Financial Accounting Foundation, Norwalk, Connecticut. Copyright 1974-1980 by American Institute of Certified Public Accountants.
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Fed explores new master account type, FASB issues PSL ASU, SEC chair outlines digital assets approach, CorpFin releases post-shutdown Q&A & more.
Get details of OCC and FDIC financial and reputation risk proposals, FASB internal-use software ASU, CorpFin government shutdown Q&A, and more.
Read about FDIC, NCUA Q2 industry data; Fed large bank capital requirements; FASB digital assets project; SEC reg flex agenda; PCAOB QC 1000 timeline.