January 2026 Financial Reporting, Governance, and Risk Management

Message from Sydney Garmong, Partner, National Office

We Indiana University Hoosiers are not used to using the words “football” and “great,” or even “OK,” in the same sentence. From Jason Gay’s article in the Jan. 20 Wall Street Journal, “The Indiana Hoosiers Are National Champions. College Football Will Never Be the Same,” two quotes stood out to me: “It’s like going down to the basement and finding the cat singing opera and folding laundry,” and “The Big Ten media poll picked Indiana to finish sixth in the conference. Sixth! In the conference!”

As an IU fan, my reaction was a combination of a big smile, a quiet fist bump, and wondering “Did that really happen?” Congratulations to Curt Cignetti, Fernando Mendoza, and the entire team! For more about our amazing quarterback, please read a letter from Elsa Mendoza, written a couple of days before the Heisman Trophy ceremony: “Dear Fernando.” The last undefeated IU team that won a national championship was Bobby Knight’s 1975-1976 team, so it is remarkable that 50 years later, the Hoosiers did it again.

Meanwhile, we had a flurry of activity from the Financial Accounting Standards Board and bank regulators in late 2025, so I am delighted to report January (so far) has been relatively quiet. The federal banking agencies have several proposals open for comment, primarily focusing on right-sizing regulation. The National Credit Union Administration issued a second round of proposals as part of its Deregulation Project.

Of note to public companies, the Securities and Exchange Commission (SEC) is looking for feedback on Regulation S-K, with the SEC chair noting in his Jan. 13, 2026, statement that it “has grown from the size of a gym locker to the size of an artificial-intelligence data center.” Comments are due April 13, 2026.

Last month, we participated in the 2025 American Institute of Certified Public Accountants (AICPA) conference on SEC and Public Company Accounting Oversight Board (PCAOB) developments, in Washington, D.C., which some refer to as the annual nerd-fest. As good nerds do, we took notes, and we issued “AICPA Conference on Current SEC and PCAOB Developments: 2025 Top Takeaways” earlier this month.

Of interest to audit committees, the Center for Audit Quality and Ideagen Audit Analytics released the “Audit Committee Transparency Barometer 2025,” which analyzes proxy disclosures of S&P Composite 1500 companies to assess transparency of audit committee oversight of the external auditor and other financial reporting matters.

We wish you well in 2026, and we look forward to keeping you updated. Of course, we welcome your feedback – both good and bad.

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From the federal financial institution regulators

Agencies publish 2026 CRA asset-size thresholds

In December 2025, the Federal Deposit Insurance Corp. (FDIC), Office of the Comptroller of the Currency (OCC), and Federal Reserve Board (Fed) announced revisions to the Community Reinvestment Act (CRA) asset-size thresholds for 2026, which determine the framework and criteria for how institutions meet the credit needs of their respective communities.

As a result of the 2.51% increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the period ending in November 2025, these are the CRA asset-size thresholds:

A small bank is an institution that, as of Dec. 31 of either of the prior two calendar years, had assets of less than $1.649 billion.
An intermediate small bank is a small institution with assets of at least $412 million as of Dec. 31 of both of the prior two calendar years and less than $1.649 billion as of Dec. 31 of either of the prior two calendar years.

The revised thresholds are in effect from Jan. 1, 2026, through Dec. 31, 2026.

OCC proposes clarification of national trust authority

On Jan. 8, 2026, the OCC released a notice of proposed rulemaking to amend its national bank chartering regulation (12 CFR 5.20) to clarify the long-standing authority of national banks limited to the operations of a trust company and related activities to engage in both nonfiduciary and fiduciary activities. The proposal would revise regulatory language to align more closely with the OCC’s statutory chartering authority under the National Bank Act, replacing references to “fiduciary activities” with “operations of a trust company and activities related thereto” and making conforming edits to related paragraphs to eliminate potential confusion about the scope of permissible activities.

Comments are due Feb. 11, 2026.

OCC proposes amendments to heightened standards framework

On Dec. 23, 2025, the OCC released a notice of proposed rulemaking to amend its heightened standards guidelines applicable to large covered institutions. The proposed guidance would significantly increase the average total consolidated assets threshold for coverage from $50 billion to $700 billion, recalibrating which institutions are subject to the guidelines’ risk governance and board oversight expectations. The proposal also would revise the definition of a “covered bank” to include certain institutions below the threshold if their parent controls a covered bank or if the OCC determines their operations are highly complex or otherwise present heightened risk, clarify compliance dates, and make other technical amendments.

Comments are due March 2, 2026.

OCC proposes clarifications on escrow interest and fee authority

On Dec. 23, 2025, the OCC released two notices of proposed rulemaking addressing national banks’ and federal savings associations’ authority over escrow accounts, including the payment of interest and assessment of related fees. The proposals would codify banks’ discretion to set escrow terms and determine that federal law preempts certain state interest-on-escrow requirements, including New York’s law and similar laws in 11 other states.

Comments are due Jan. 29, 2026.

OCC proposes simplified strategic plan process under CRA

On Dec. 17, 2025, the OCC proposed guidance for a simplified strategic plan process under the CRA aimed at reducing regulatory burden for community banks. The simplified process is designed to provide clearer guidance on measurable goals and strategic plan components, potentially reducing burden for a range of community banks, including those with nontraditional delivery channels.

Comments are due Feb. 20, 2026.

FDIC proposes GENIUS Act application framework for payment stablecoins

On Dec. 16, 2025, the FDIC released a proposed rule to implement the application provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) for FDIC-supervised institutions seeking to issue payment stablecoins through a subsidiary. The proposal would establish the application process and procedures for insured state nonmember banks and state savings associations to obtain FDIC approval for a subsidiary to become a permitted payment stablecoin issuer, including evaluating applications based on statutory factors, processing them within prescribed timeframes, and providing an appeal process for denied applications.

Comments are due Feb. 17, 2026.

FDIC amends final quarter of special assessment collection

On Dec. 16, 2025, the FDIC issued an interim final rule adjusting the eighth and final quarterly collection tied to the 2023 systemic risk exception. The change is intended to better align total collections with updated loss estimates as of Sept. 30, 2025.

Fed provides transparency for supervisory practices

On Dec. 18, 2025, the Fed published the first of several staff manuals for the supervision of the largest and most complex banks, making internal supervisory practices more transparent by redacting confidential supervisory information for public release. The manual, which will be updated to reflect the program’s recent name change from Large Institution Supervision Coordinating Committee (LISCC) to Global Systemically Important Banks (GSIB) program and the board’s November supervisory principles, marks the beginning of a series of expected publications early next year covering areas such as capital and liquidity planning, recovery and resolution planning, and large bank risk identification.

Fed requests comment on new payment account

On Dec. 19, 2025, the Fed requested public input on a proposed “payment account” that eligible financial institutions would use solely for the limited purpose of clearing and settling payments with the Fed. It is intended to support innovation in the payments system and promote a safe, efficient payment infrastructure by tailoring access for institutions with new business models. Payment accounts would differ from traditional master accounts by paying no interest, offering no access to Fed credit, and having balance caps.

Comments are due Feb. 6, 2026.

Fed issues new policy statement to facilitate innovation

On Dec. 22, 2025, the Fed published a policy statement under Section 9(13) of the Federal Reserve Act replacing its 2023 interpretation and clarifying how it may limit the activities of state member banks and their subsidiaries consistent with Section 24 of the Federal Deposit Insurance Act. The policy states the board’s intent to facilitate innovation by state member banks while maintaining safety and soundness and U.S. financial stability, applies principles such as “same activity, same risks, same regulation,” and provides guidance on when activities are permissible for insured and uninsured state member banks. The policy statement became effective on Dec. 22, 2025.

FinCEN delays investment adviser AML Rule until 2028

On Dec. 31, 2025, the Financial Crimes Enforcement Network (FinCEN) issued a final rule postponing the effective date of the investment adviser anti-money laundering (AML) and countering the financing of terrorism programs and suspicious activity reporting requirements from Jan. 1, 2026, to Jan. 1, 2028. The extension provides additional implementation time but does not signal a change in underlying policy expectations.

NCUA advances second round of deregulation proposals

On Dec. 23, 2025, the National Credit Union Administration (NCUA) announced a second set of proposed regulatory changes under its Deregulation Project. The proposals are intended to reduce regulatory burden and may affect operational, reporting, or governance requirements for credit unions.

From the Financial Accounting Standards Board (FASB)

FASB issues codification improvements

On Dec. 17, 2025, the FASB issued Accounting Standards Update (ASU) 2025-12, “Codification Improvements,” which makes targeted technical corrections and clarifications to the Accounting Standards Codification without significantly changing existing accounting requirements. The update addresses 33 issues and includes clarifications relevant to financial institutions, such as diluted earnings per share calculations when losses from continuing operations exist, application of Topic 860 to certain transfers of receivables from contracts with customers, and refinements to guidance affecting beneficial interests. The amendments generally are expected to have limited operational impact. The amendments are effective for annual reporting periods beginning after Dec. 15, 2026, including interim periods, with early adoption permitted on an issue-by-issue basis.

FASB releases 2026 taxonomies

On Dec. 15, 2025, the FASB released the 2026 FASB Taxonomies, including the GAAP Financial Reporting Taxonomy, SEC Reporting Taxonomy, and related taxonomies used for XBRL reporting. The updates reflect accounting standards issued in 2025 prior to Dec. 1, 2025, and include refinements to commonly used reporting elements and data quality validation rules. The 2026 GAAP and SEC taxonomies are expected to be accepted by the SEC in early 2026 and will be relevant for SEC registrants subject to XBRL filing requirements.

From the Securities and Exchange Commission (SEC)

SEC chair announces review of Regulation S-K disclosure requirements

On Jan. 13, 2026, SEC Chair Paul Atkins issued a statement announcing that the commission is reviewing Regulation S-K, which governs many qualitative disclosure requirements outside the financial statements in public company filings. Atkins noted that Regulation S-K has expanded significantly over time, remarking that it “has grown from the size of a gym locker to the size of an artificial-intelligence data center,” and directed the Division of Corporation Finance (CorpFin) to evaluate whether existing requirements continue to elicit material, decision-useful information for investors.

Atkins invited public input on potential changes to the disclosure framework. Comments are due April 13, 2026.

SEC publishes staff report on capital-raising dynamics

On Jan. 8, 2026, the SEC’s Office of the Advocate for Small Business Capital Formation released its annual staff report examining capital-raising activity in the United States. The report compiles market data across multiple stages of the business life cycle, summarizes capital formation trends observed during fiscal year 2025, and outlines the office’s outreach efforts and advisory committee activities intended to inform policymakers, small businesses, and investors.

SEC proposes amendments to ‘small entity’ definition

On Jan. 7, 2026, the SEC proposed amendments to update the definitions of “small entity” as applied to certain registered investment companies, investment advisers, and business development companies under the Regulatory Flexibility Act. The proposal would revise asset-based thresholds, adjust how assets of related entities are considered, and provide a mechanism for periodic inflation adjustments, with the goal of better aligning regulatory analysis with the scale and characteristics of smaller market participants.

Comments are due March 13, 2026.

SEC issues statement on departure of commissioner

On Jan. 2, 2026, Atkins and Commissioners Hester Peirce and Mark Uyeda issued a statement regarding the departure of Commissioner Caroline Crenshaw, expressing gratitude for her service at the SEC. She joined the SEC in 2013 and served in various roles prior to her appointment as commissioner in 2020.

SEC announces retirement of CorpFin deputy director

On Dec. 29, 2025, the SEC announced that Cicely LaMothe, deputy director of CorpFin, retired from the agency. The announcement highlighted her accomplishments during her more than 20 years of service.

Staff, commissioner address custody and trading of crypto asset securities

On Dec. 17, 2025, the SEC’s Division of Trading and Markets issued a staff statement on the application of Exchange Act Rule 15c3-3 to broker-dealers that custody crypto asset securities on behalf of customers, describing circumstances under which staff would not object to a broker-dealer deeming itself to have “physical possession or control” of such securities, subject to specified conditions, while the SEC continues to evaluate longer-term custody approaches.

Following issuance of the statement, Peirce encouraged the division to develop recommendations for SEC consideration regarding potential amendments to Rule 15c3-3. In separate remarks, she requested feedback from stakeholders related to national securities exchanges and alternative trading systems seeking to trade crypto asset securities and outlined a series of questions for consideration.

Leaders join crypto roundtable on financial surveillance and privacy

On Dec. 15, 2025, Atkins, Peirce, and Uyeda delivered remarks at a Crypto Task Force roundtable focused on financial surveillance and privacy. The roundtable was convened as part of the SEC’s ongoing engagement on regulatory issues related to digital assets and emerging financial technologies.

Commissioner speaks on the future of financial regulation

On Dec. 11, 2025, Crenshaw delivered remarks as part of the Brookings Institution’s “Future of Financial Regulation” series. In her speech, she stated that while this was not a “farewell address,” she would reflect on what she has learned during her tenure, and about the role of the securities laws in providing legal structure and checks and balances among market participants. She discussed recent trends she described as devaluing investor rights, reducing market transparency, expanding retail access to private markets without comparable protections, and weakening enforcement deterrence. She also addressed challenges related to market structure, private markets, artificial intelligence, regulatory capacity, and the importance of transparency, long-term investing, and investor-focused policymaking.

SEC chair comments on potential revisions to nonbank designation guidance

On Dec. 11, 2025, Atkins issued a statement noting that the Financial Stability Oversight Council (FSOC) received a briefing from Treasury staff on potential revisions to the council’s interpretive guidance regarding nonbank financial company determinations. He expressed support for revisiting the nonbank designation framework, citing concerns that designation could be applied arbitrarily, impair companies’ ability to plan for growth, and impose regulatory oversight that may not align with a nonbank firm’s business model. He also emphasized the importance of reinstating safeguards such as cost-benefit analysis and an assessment of the likelihood of material financial distress in any revised guidance.

From the Public Company Accounting Oversight Board (PCAOB)

PCAOB names acting enforcement director

On Dec. 23, 2025, the PCAOB announced that William Ryan was named acting director of its Division of Enforcement and Investigations, following the retirement of Robert Rice on Dec. 31, 2025. Ryan joined the PCAOB in 2007 and served in various leadership roles in enforcement, most recently as chief counsel.

PCAOB approves 2026 budget

On Dec. 19, 2025, the PCAOB approved its fiscal year 2026 budget, totaling $362.1 million, subject to SEC approval. The budget is intended to support the PCAOB’s responsibilities under the Sarbanes-Oxley Act, including oversight of audit firms, standard-setting, inspections, and enforcement activities.

From the Center for Audit Quality (CAQ)

CAQ releases annual transparency report

On Dec. 4, 2025, the CAQ and Ideagen Audit Analytics released the “Audit Committee Transparency Barometer 2025,” which analyzes proxy disclosures of S&P Composite 1500 companies to assess transparency of audit committee oversight of the external auditor and other financial reporting matters. Now in its 12th year, the report reflects long-term progress in audit committee disclosures while continuing to highlight areas where enhanced transparency is encouraged.

The 2025 results show continued strength in disclosures related to cybersecurity oversight and board skills matrices, with skills matrix disclosure increasing across all market segments. Disclosure trends related to oversight of the external auditor, including auditor evaluation, fee considerations, and engagement partner selection, remained relatively stable, signaling opportunities for further enhancement. The report includes highlights of key results, a summary of disclosure rates, examples of effective disclosures, a sample leading-practice audit committee report, and questions for consideration when preparing audit committee disclosures.