June 2026 Financial Reporting, Governance, and Risk Management
Message from Sydney Garmong, partner, national office
This Sunday, June 21, marks the official start of summer, and we hope some relaxation is in your summer plans.
The federal banking agencies and the National Credit Union Administration continue to issue proposals to reshape policies. Of interest to all financial institutions is the May 19, 2026, press release from the Federal Financial Institutions Examination Council requesting public comment on proposed revisions to the Uniform Financial Institutions Rating System, commonly known as the CAMELS rating system. Comments are due Aug. 17, 2026.
Yesterday, the current expected credit loss (CECL) model turned 10 – how times flies! Accounting Standards Update 2016-13 was issued on June 16, 2016. As we shared last month, the May 12 post-implementation review (PIR) roundtable generated discussion of whether the benefits of forward-looking loss estimation justify the operational and compliance burden, particularly for community institutions. Discussion included strong commentary from Fed Vice Chair for Supervision Michelle Bowman. She said, “Community banks would be better served by returning to the incurred loss standard.” The Financial Accounting Standards Board PIR process is robust, so let’s see how this unfolds.
The Securities and Exchange Commission (SEC) continues its focus on capital formation. To recap the four proposals of highest interest:
|
Proposal |
What it does |
Issued |
Comment deadline |
|
Permits issuers to elect semiannual reporting, replacing three quarterly Form 10-Q filings with a single midyear Form 10-S. |
May 5, 2026 |
July 6, 2026 |
|
|
Simplifies the filer-status framework by largely moving to a large accelerated filer/non-accelerated filer structure and extends many emerging growth company/smaller reporting company accommodations to non-accelerated filers. |
May 19, 2026 |
July 20, 2026 |
|
|
Expands Form S-3 eligibility, broadens shelf-registration flexibility, modernizes Form S-1, and streamlines the registered offering process. |
May 19, 2026 |
July 27, 2026 |
|
|
“Rescission of Climate-Related Disclosure Rules” (S7-2026-19) |
Rescinds the SEC's 2024 climate-related disclosure rules and returns climate disclosure considerations to the traditional materiality-based framework. |
May 29, 2026 |
Aug. 3, 2026 |
I hope you can join us for two webinars: “Q2 2026 Quarterly Close: Keep Up on Accounting Trends and Topics,” at 2 p.m. Eastern on Monday, June 22, 2026, and the July “Quarterly Financial Services Audit Committee Overview,” at 2 p.m. Eastern on Thursday, July 9, 2026.
Two of the largest American Institute of Certified Public Accountants (AICPA) conferences for our industry are just around the corner. This year, the AICPA banking conference and AICPA credit unions conference will occur concurrently, Sept. 14-16, 2026, at the Marriott Marquis, Washington, D.C. Here are the discount codes for registering to earn up to 21.5 CPE credits:
- The 2026 AICPA Conference on Banks & Savings Institutions. Use the code “BAN26” 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 Friday, July 31, 2026.
- The 2026 AICPA Conference on Credit Unions. Use the code “CU26” 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 Friday, July 31, 2026.
We hope to see you in September in Washington, D.C. That is not a misprint – the conferences are moving back into D.C. proper!
With the second quarter coming to a close, we wish you a safe and enjoyable July Fourth, as our nation celebrates its 250th anniversary.
Financial Institutions Executive Briefing
Get updates on accounting, governance, risk management, and compliance issues.
From the federal financial institution regulators
FDIC reports strong first quarter 2026 industry performance
On May 27, 2026, the Federal Deposit Insurance Corp. (FDIC) reported that FDIC-insured institutions earned aggregate net income of $80.5 billion during the first quarter of 2026, reflecting continued resilience across the banking sector despite ongoing economic uncertainty and credit pressures. The industry reported a return on assets of 1.26%, while domestic deposits increased for the seventh consecutive quarter and loan balances continued to grow. The FDIC noted that capital and liquidity levels remained strong, supporting the industry’s ability to withstand potential stress. Although overall asset quality remained favorable, the agency highlighted continued weakness in certain commercial real estate and consumer loan portfolios, where delinquency rates remain elevated relative to historical norms.
The Quarterly Banking Profile suggests that institutions continue to benefit from strong earnings and balance sheet performance, though credit quality trends and funding costs remain areas of supervisory focus. As interest rate conditions evolve, banks may continue to face pressure on margins and credit performance in select portfolios.
NCUA reports strong first quarter 2026 credit union performance
On June 9, 2026, the National Credit Union Administration (NCUA) released first quarter 2026 performance data showing that federally insured credit unions remained financially strong, supported by continued growth in assets, loans, deposits, membership, and net worth. Total assets increased 4.9% year over year to $2.48 trillion, while loans outstanding grew 4.6% to $1.73 trillion. In addition, the aggregate net worth ratio improved to 11.24%, reflecting the industry’s continued capital strength.
The report also highlights improved profitability, with annualized net income increasing 30.5% from the prior year to $20.4 billion. Higher net interest margins and lower funding costs contributed to stronger earnings performance. While overall financial conditions remained favorable, the NCUA noted a modest increase in delinquency rates across several loan categories, including credit card and real estate portfolios, indicating that credit quality remains an area for ongoing monitoring.
Banking agencies and NCUA propose CAMELS ratings framework revisions
On May 19, 2026, the Federal Financial Institutions Examination Council (FFIEC) requested public comment on proposed revisions to the Uniform Financial Institutions Rating System, commonly known as the CAMELS rating system. The proposal would retain the existing CAMELS framework while modifying component and composite rating definitions and evaluation factors to highlight material financial risks and improve transparency in supervisory ratings. The proposed changes would reduce emphasis on policies, procedures, and documentation and instead focus ratings on factors that materially affect an institution’s financial condition and risk profile.
The proposal also would remove the requirement that supervisors give “special consideration” to the management component when assigning a composite CAMELS rating, revise management component evaluation factors and definitions, clarify the treatment of specialty review findings, and update composite rating definitions. Because CAMELS ratings play a significant role in supervisory oversight, enforcement decisions, merger applications, and other regulatory processes, any changes to the framework are likely to receive substantial industry attention. The FFIEC stated that the revisions are intended to strengthen the link between CAMELS ratings and an institution’s safety and soundness while providing greater transparency and predictability in the supervisory process.
The proposed revisions were published in the Federal Register on May 19, 2026. Comments are due Aug. 17, 2026.
Fed requests comment on proposed payment account framework
On May 20, 2026, the Federal Reserve Board (Fed) requested public comment on a proposal that would establish a new payment account framework for certain legally eligible institutions seeking access to Fed payment services. The proposal is intended to support innovation in the payments system by providing eligible institutions with access to Fed payment services while mitigating risks to Fed banks and the broader payment system.
Under the proposal, payment account holders would be permitted to use specified Fed payment services but would not have access to intraday credit, the discount window, or interest on balances held at a Reserve Bank. The proposal would not expand legal eligibility for Fed accounts or payment services and would maintain expectations that account holders appropriately manage illicit finance risks. The Fed also encouraged Reserve Banks to temporarily pause decisions on account access requests from institutions subject to the most stringent review under its Account Access Guidelines while the policy development process is underway.
The proposed revisions to the Fed’s payment account framework were published in the Federal Register on May 29, 2026. Comments are due July 27, 2026.
OCC issues final rule on preemption of state escrow interest laws
On May 15, 2026, the Office of the Comptroller of the Currency (OCC) issued a final rule, “Preemption Determination on State Interest-on-Escrow Laws,” concluding that federal law preempts state laws that restrict the ability of OCC-regulated banks to decide whether and to what extent to pay interest or other compensation on funds held in real estate escrow accounts or assess fees in connection with those accounts. The OCC determined that New York’s interest-on-escrow law is preempted by the National Bank Act and concluded that 13 other states and territories have substantively equivalent laws that are likewise preempted.
The final rule complements a separate OCC rule codifying national banks’ authority to establish and maintain escrow accounts. According to the OCC, the action is intended to preserve the ability of national banks and federal savings associations to exercise federally authorized banking powers without interference from state laws that limit operational flexibility in administering escrow accounts.
The final rule was published in the Federal Register on May 19, 2026, and will be effective June 18, 2026.
NCUA issues interim final rule clarifying federal credit unions’ authority to charge non-interest fees
On June 8, 2026, the NCUA issued an interim final rule, “Preemption-Federal Credit Union Non-Interest Charges and Fees,” clarifying that federal credit unions have authority under the Federal Credit Union Act to charge non-interest fees, including interchange fees associated with debit and credit card transactions. The rule also confirms that state laws restricting or regulating such fees are preempted and do not apply to federal credit unions.
The action follows a similar final rule from the OCC and is intended to eliminate uncertainty regarding federal credit unions’ authority to assess and receive non-interest fees, including fees collected through third-party payment networks and fee-sharing arrangements. The agency stated that the rule reinforces the NCUA’s exclusive authority over federal credit union fee practices and promotes regulatory consistency with similar actions taken for national banks.
The interim final rule was published in the Federal Register on June 9, 2026, with an effective date of June 30, 2026. The NCUA is accepting public comments by July 9, 2026.
FDIC Office of the Ombudsman publishes annual report
On June 2, 2026, the FDIC published its “Office of the Ombudsman 2025 Annual Report.” The report highlights the office’s efforts to facilitate communication between financial institutions and the FDIC, assist in resolving concerns related to supervisory findings and examination processes, and support stakeholders through confidential and independent dispute-resolution services. The report also notes the ombudsman's administration of post-examination surveys and its continued role in providing Freedom of Information Act assistance to help improve transparency and responsiveness.
FinCEN advisory asks banks and credit unions to detect and report activity related to unlawful employment of unauthorized workers
On June 5, 2026, the Financial Crimes Enforcement Network (FinCEN) issued an advisory alerting financial institutions to risks associated with the unlawful employment of unauthorized workers and related activity that might threaten the integrity of the U.S. financial system. The advisory outlines typologies involving identity theft, payroll tax evasion, shell companies, labor brokers, and other schemes used to facilitate unlawful employment arrangements, while providing 18 indicators to assist institutions in identifying and reporting suspicious activity.
FinCEN’s advisory encourages financial institutions to incorporate the indicators into existing anti-money laundering (AML) and suspicious activity monitoring programs and to use a designated reporting term when filing related Suspicious Activity Reports. The advisory reflects FinCEN's continued focus on leveraging the Bank Secrecy Act framework to combat financial crime and support broader law enforcement and national security priorities, underscoring the importance of maintaining robust transaction monitoring, customer due diligence, and risk-based compliance controls.
FinCEN issues alert on IRGC money laundering
On May 11, 2026, FinCEN issued an alert designed to assist financial institutions in identifying and reporting suspicious activity associated with the Islamic Revolutionary Guard Corps (IRGC) and its affiliated financial networks. The alert outlines methods used to facilitate sanctions evasion, illicit procurement, oil smuggling, and other financial activities that support the organization, and it provides a series of red flags intended to enhance transaction monitoring and suspicious activity reporting efforts.
FinCEN emphasized that the alert is intended to support financial institutions’ efforts to detect and disrupt illicit financial activity tied to national security threats. The agency encouraged institutions to incorporate the typologies and indicators into existing AML and sanctions compliance programs. The alert serves as a reminder that geopolitical developments continue to shape regulatory expectations surrounding BSA/AML compliance and sanctions risk management.
From the federal agencies: Implementing the GENIUS Act
NCUA proposes standards for PPSIs
On May 15, 2026, the NCUA announced a proposed rule establishing operational, governance, and risk management standards for NCUA-licensed permitted payment stablecoin issuers (PPSIs). The proposal is intended to align the credit union framework with standards being developed for bank-affiliated stablecoin issuers under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act and reflects increasing regulatory focus on digital asset activities within federally supervised financial institutions.
The proposed rule addresses areas including governance, compliance management, cybersecurity, liquidity, operational resilience, custody, capital, reporting, and risk oversight. The proposal would establish expectations for credit unions seeking to issue payment stablecoins through subsidiaries while maintaining standards comparable to those proposed for bank-affiliated issuers.
The proposed rule was published in the Federal Register on May 18, 2026. Comments are due July 17, 2026.
FDIC proposes BSA and sanctions compliance standards for PPSIs
On May 22, 2026, the FDIC approved a proposed rule, “Bank Secrecy Act and Sanctions Compliance Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers,” that would establish Bank Secrecy Act (BSA), AML/countering the financing of terrorism (AML/CFT), and economic sanctions compliance standards for FDIC-supervised permitted payment stablecoin issuers. The proposal would require PPSIs to comply with applicable FinCEN and Office of Foreign Assets Control requirements, including AML/CFT program, reporting, sanctions compliance, and future customer identification program requirements being developed under the GENIUS Act.
The proposal generally would apply existing financial crime compliance requirements to stablecoin issuers rather than create a new digital asset-specific framework. It also would establish supervisory and enforcement standards for PPSI AML/CFT programs and formalize coordination between the FDIC and FinCEN before certain AML/CFT-related supervisory or enforcement actions are taken. Under the proposal, a PPSI that maintains an effective AML/CFT program consistent with applicable FinCEN requirements generally would not be subject to separate FDIC action based solely on those program requirements.
This is the FDIC’s third proposed rule implementing the GENIUS Act and was published in the Federal Register on June 5, 2026. Comments are due Aug. 4, 2026.
From the Financial Accounting Standards Board (FASB)
FASB issues environmental credits and environmental credit obligations guidance
On May 19, 2026, the FASB issued Accounting Standards Update (ASU) 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The ASU establishes recognition, measurement, presentation, and disclosure requirements for environmental credits and related obligations. These requirements are intended to provide clearer accounting guidance in an area where practice previously lacked specific authoritative guidance. While the standard is broader than the financial institutions sector, it could be relevant to institutions that participate in environmental credit markets or are subject to environmental compliance programs.
FASB adds project on private credit disclosures
At its May 13, 2026, board meeting, the FASB added a project to its technical agenda on private credit disclosures. The board decided that the scope of the project would be limited to investment companies within the scope of Topic 946, “Financial Services – Investment Companies,” and indicated it will discuss at a future meeting which asset classes should be subject to any additional disclosure requirements. Although the project is currently scoped to investment companies, it still could be relevant to banks and other financial institutions with exposure to private credit markets or affiliated investment management activities.
From the Securities and Exchange Commission (SEC)
SEC proposes rescission of climate-related disclosure rules
On May 29, 2026, the SEC issued a proposal rescinding the climate-related disclosure rules adopted in 2024 in their entirety. If adopted as proposed, registrants would not be required to provide the climate disclosures contemplated by the 2024 rules, including greenhouse gas emissions attestation requirements for certain filers.
In separate statements, SEC Chair Paul Atkins and Commissioners Hester Peirce and Mark Uyeda discussed the proposal in relation to the SEC’s statutory authority and materiality-based disclosure framework.
Comments on the proposal are due Aug. 3, 2026.
For more information, please see the Crowe article “Change in Climate: Proposed Rescission of SEC Climate Rule.”
SEC chair discusses capital formation and public company reporting
At the 2026 Reagan National Economic Forum on May 29, Atkins discussed the commission’s capital formation mandate and the regulatory environment for public companies. Atkins stated that the SEC’s disclosure and regulatory burden had expanded over time and that the number of companies listed on U.S. exchanges had fallen roughly 40% from the time he left the SEC as a staff member in 1994 to when he returned as chair.
Atkins described several current SEC initiatives related to going and staying public, including a recent proposal to provide companies flexibility between quarterly and semiannual reporting cadences. He also referenced two rule proposals related to filer status and registered offering reforms. These proposals are intended to reduce public company burdens by recalibrating disclosure requirements and making it easier for companies to access the public markets. Atkins also discussed the commission’s proposal to rescind the climate-related disclosure rule.
SEC Corp Fin director discusses registered offering and filer status proposals
On June 10, 2026, Director of Corporation Finance (Corp Fin) Jim Moloney, discussed recent SEC proposals related to registered offerings and filer status. The proposals include registered offering reforms that would expand access to shelf registration for smaller public companies and filer status reforms that would raise the large accelerated filer threshold from $700 million to $2 billion in public float.
Moloney stated that the proposals aim to “improve and remodel” the SEC’s regulatory frameworks while preserving “the cornerstone principle of financial materiality.” He also noted that this principle is reflected in the proposal to rescind the climate disclosure rules and will guide future reform efforts for Regulation S-K, including executive compensation disclosure requirements.
SEC publishes draft strategic plan
On June 2, 2026, the SEC published its draft strategic plan, which focuses on the agency’s three-part mission of protecting investors, facilitating capital formation, and maintaining fair, orderly, and efficient markets. The draft plan includes three goals: renewing regulatory policy to support innovation, capital formation, market efficiency, and investor protection; shifting regulatory practices to increase stakeholder engagement and facilitate compliance; and optimizing operational efficiency through organizational, technology, and performance management initiatives.
Comments on the strategic plan are due July 2, 2026.
SEC establishes joint data standards
On June 8, 2026, the SEC established joint data standards under the Financial Data Transparency Act of 2022. The final rule sets technical standards for data submitted to certain financial regulatory agencies and is intended to promote interoperability through common identifiers and machine-readable data formats.
Alongside the SEC, eight additional agencies have either implemented or are expected to implement joint standards.
SEC commissioner remarks on semiannual reporting
On June 4, 2026, Peirce delivered remarks at the SEC Investor Advisory Committee meeting addressing the committee’s draft recommendation on the SEC’s semiannual reporting proposal. Peirce noted that the draft recommendation reflected concerns raised by commenters during the first half of the comment period. She asked the committee to consider whether concerns related to Form 10-Q reporting costs and investor benefits should be addressed through streamlining reporting burdens rather than adjusting reporting frequency.
Peirce also asked whether any such streamlining should occur as part of the current rulemaking or through the commission’s broader review of disclosure requirements. She also asked whether quarterly reporting should be optional for smaller companies, even if not made optional for all companies, and recommended future consideration of proposals related to filer status determination and the registered offering process.
SEC commissioner speaks on privacy
On May 27, 2026, Peirce delivered remarks at the Regulatory PETshop Series on privacy-enhancing crypto technologies and financial services regulation. She discussed the role of privacy in financial transactions as well as the SEC Crypto Task Force’s consideration of transfer agent recordkeeping and related technologies. Her remarks also addressed technologies that could support know-your-customer and anti-money laundering objectives while minimizing the collection and retention of personally identifiable information
On June 2, 2026, Peirce participated in the IC3 Blockchain Camp, where she discussed regulatory boundaries for the crypto world. She stated that the SEC is considering where regulation should apply, including through a staff statement on certain user interfaces and a planned innovation exemption for onchain trading of National Market System stock. Her remarks also addressed principles related to open-source code, blockchains as general-purpose technology, base-layer neutrality, centralized actors in crypto markets, and direct transactions without intermediaries.
SEC proposes rescission of Regulation NMS rules
On June 11, 2026, the SEC proposed amendments to remove Rules 611 and 610(e) from Regulation NMS. This change would end the trade-through prohibition for national market system stocks, lift restrictions on locking and crossing quotations, eliminate related definitions in Rule 600, and update other relevant provisions accordingly.
Comments are due 60 days after publication in the Federal Register.
From the Public Company Accounting Oversight Board (PCAOB)
PCAOB announces inspections modernization council
On May 28, 2026, the PCAOB announced that it is forming an Inspections Modernization Council and is seeking participation from investors, audit committee members, financial executives, academics, technologists, regulators, and practitioners. The PCAOB said the new advisory body is intended to help inform modernization of the inspections program so that it remains relevant and resilient within an evolving audit environment. PCAOB Chair Demetrios (Jim) Logothetis commented, “The Inspections Modernization Council will help us shape the future of PCAOB inspections, and we invite individuals of the highest integrity to join us in this effort.”
PCAOB issues proposed QC 1000 amendments for public comment
On June 9, 2026, the PCAOB issued for public comment proposed amendments related to QC 1000, “A Firm’s System of Quality Control,” along with related amendments to PCAOB forms and the QC reporting rule. The issuance signals that the board continues to refine implementation of its quality control framework ahead of QC 1000’s Dec. 15, 2026, effective date.
From the American Institute of CPAs and the Chartered Institute of Management Accountants (AICPA & CIMA)
AICPA updates external audit confirmation standards
On May 14, 2026, the Auditing Standards Board approved a standards update on external confirmations. According to the AICPA, the new “Statement on Auditing Standards: External Confirmations” modernizes confirmation procedures by requiring the auditor to use external confirmations for cash and cash equivalents held by third parties unless certain conditions exist, updating the guidance to reflect the widespread use of intermediaries, and establishing new conditions for the use of negative confirmations. The standard also provides guidance on directly accessing information maintained by a knowledgeable external source as a means of satisfying certain confirmation requirements.
AICPA seeks feedback on strategic plans for ethics and peer review bodies
On June 1, 2026, the AICPA announced that it is seeking public comment on proposed 2027-2030 strategic plans for its Professional Ethics Executive Committee and Peer Review Board. The draft plans address issues affecting the profession including AI and automation, emerging assurance areas such as sustainability and cybersecurity, mergers and acquisitions within the profession, and increasing business and regulatory complexity. The plans also outline initiatives related to standards, stakeholder engagement, and modernization of operations.
From the Center for Audit Quality (CAQ)
CAQ comments on OCC proposed rule implementing the GENIUS Act
On May 1, 2026, the CAQ submitted a comment letter to the OCC on its proposed rulemaking to implement the GENIUS Act. In the letter, the CAQ said it supports the OCC’s objective of enhancing transparency, reliability, and accountability for permitted payment stablecoin issuers and focused its comments on areas affecting public company auditors, including financial statement audits, examinations of monthly composition reports, and mechanisms to improve the reliability of reported information, such as examinations of internal controls over stablecoin operations and reserves.
CAQ comments on PCAOB strategic priorities
On May 11, 2026, the CAQ submitted a comment letter in response to the PCAOB’s request for comment on its strategic priorities. The CAQ recommended that the board prioritize modernization of inspections to incorporate firms’ quality control systems under QC 1000, execute inspections with greater transparency, timeliness, and consistency, improve inspection reporting to focus on material matters and stakeholder needs, and pursue standard-setting selectively through a formal and transparent agenda-setting process.
Portions of AICPA materials reprinted with permission. Copyright 2026 by AICPA.
FASB materials reprinted with permission. Copyright 2026 by Financial Accounting Foundation, Norwalk, Connecticut. Copyright 1974-1980 by American Institute of Certified Public Accountants.
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FDIC, NCUA release Q1 results; banking agencies and NCUA propose CAMELS framework changes; Fed proposes payment account framework; and more.
FDIC, Fed, OCC finalize CBLR rule & revise model risk management guidance; FASB hosts CECL roundtable; SEC proposes filer status reforms; and more.
Federal banking agencies request comment on proposals to revise capital framework, federal agencies issue proposals to implement GENIUS Act, and more.
FDIC, NCUA release Q1 results; banking agencies and NCUA propose CAMELS framework changes; Fed proposes payment account framework; and more.
FDIC, Fed, OCC finalize CBLR rule & revise model risk management guidance; FASB hosts CECL roundtable; SEC proposes filer status reforms; and more.
Federal banking agencies request comment on proposals to revise capital framework, federal agencies issue proposals to implement GENIUS Act, and more.