March 2026 Financial Reporting, Governance, and Risk Management

Message from Sydney Garmong, Partner, National Office

With the last of registrants reporting by the end of March, I hope you can enjoy a break before turning to the first quarter of 2026 financial reporting.

Since September, it’s been heard that the Securities and Exchange Commission (SEC) will consider removing the requirement for quarterly reporting. It is not a new idea – it was considered during the Donald Trump administration’s first term. Across the pond, in 2013 the European Union (EU) removed the mandatory “interim management statement” for required quarterly updates from listed companies. While still in the EU, the United Kingdom implemented the same reform, though many companies still report quarterly. The SEC’s next steps are eagerly awaited.

This month brings developments in two emerging areas – artificial intelligence and digital assets. SEC Chair Paul Atkins provided remarks on AI and disclosure considerations at the Financial Stability Oversight Council’s Artificial Intelligence Innovation Series Roundtable, and the American Institute of CPAs issued a 16-page guide on evaluating AI models for business use.

Continuing the evolution for digital assets, the commission issued guidance on crypto assets and the federal securities laws, and SEC Commissioner Hester Peirce issued a statement, including a link to frequently asked questions, on regulatory considerations. The Office of the Comptroller of the Currency (OCC) issued a proposal to establish regulatory requirements for entities that issue or engage in activities involving payment stablecoins. The federal banking agencies issued an FAQ to clarify the capital treatment of tokenized securities, and the Center for Audit Quality posted on building trust in the digital asset ecosystem.

The agencies continue the theme of deregulation. The OCC issued two final rules: 1) to rescind the agency’s Fair Housing Home Loan Data System regulation data collection and 2) to simplify licensing requirements for some corporate activities. The OCC also is requesting feedback on proposed changes to examination appeals.

Federal Reserve (Fed) Vice Chair of Supervision Michelle Bowman provided remarks on forthcoming proposed changes for capital to simplify the framework, reduce overlapping requirements, and better calibrate capital requirements to underlying risk. Also, the Fed is seeking comment to remove “reputation risk” from supervision.

I hope you can join us for two webinars: “Q1 2026 Quarterly Close: Keep Up on Accounting Trends and Topics,” at 2pm Eastern on Monday, March 23, 2026, and the April “Quarterly Financial Services Audit Committee Overview,” at 2 p.m. Eastern on Thursday, April 9, 2026.

On a lighter note, it is March Madness, which brings NCAA men’s and women’s basketball. I am disappointed (but not totally surprised) that the Indiana Hoosiers men’s and women’s teams were not invited to the “big dance.” For those of you participating, good luck with your brackets. Other March festivities included yesterday’s St. Patrick’s Day. I hope you enjoyed it and all things green.

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From the federal financial institution regulators

FDIC releases Q4 banking profile

On Feb. 24, 2026, the Federal Deposit Insurance Corp. (FDIC) released the latest results of its “Quarterly Banking Profile.” The results showed that insured institutions earned $77.7 billion in net income in the fourth quarter of 2025, with a 1.24% return on assets. These figures represent nearly a 10% increase in net income year over year. Moreover, capital and liquidity levels remain strong. The number of FDIC-insured institutions declined by 43 during the fourth quarter to 4,336.

NCUA releases Q4 performance data

On March 6, 2026, the National Credit Union Administration (NCUA) released its fourth quarter 2025 Credit Union System Performance Data, providing an overview of the financial condition of federally insured credit unions. The report highlighted strong earnings performance, with notable increases in both total net income and the net interest margin across federally insured credit unions. Total membership grew by 2.4 million to 144.7 million members, while the number of federally insured credit unions declined to 4,287 from 4,455 one year earlier, reflecting ongoing industry consolidation trends.

Fed vice chair previews Basel III revisions

On March 12, 2026, Vice Chair for Supervision Michelle Bowman delivered remarks outlining forthcoming proposals to revise the U.S. bank capital framework as regulators move toward implementing the final Basel III standards. Bowman indicated the Federal Reserve (Fed) will seek public comment on a package of reforms addressing four key components of the capital regime: stress testing, the supplementary leverage ratio, risk-based capital rules under Basel III, and the global systemically important bank surcharge. The goal of the revisions is to simplify the framework, reduce overlapping requirements, and better calibrate capital requirements to underlying risk.

OCC continues focus on regulatory burden reduction for community banks

On March 3, 2026, the Office of the Comptroller of the Currency (OCC) issued two final rules intended to reduce regulatory burden for community banks. One rule rescinds the agency’s Fair Housing Home Loan Data System regulation, eliminating outdated and largely duplicative home loan data collection requirements that applied only to national banks. A second rule simplifies licensing requirements for certain corporate activities and transactions by expanding eligibility for expedited or reduced filing procedures to qualifying community banks and federal savings associations. These changes are intended to tailor regulation to the size and risk profile of smaller institutions and allow them to focus more resources on core banking activities and local economic support.

OCC requests comment on proposed changes to examination appeals

On Feb. 17, 2026, the OCC requested public comment on a proposal to revise the agency’s bank appeals process for material supervisory determinations. The proposal would establish an appeals board to review disputes, adopt a de novo standard of review, and strengthen safeguards against retaliation for institutions that file appeals. The proposal also seeks to enhance the role of the OCC ombudsman as an independent liaison to assist banks in addressing supervisory concerns.

Fed requests comment on proposal to remove “reputation risk” from supervision

On Feb. 23, 2026, the Fed requested public comment on a proposal to formally remove references to “reputation risk” from its supervisory guidance and regulations. The proposal follows earlier actions by the board to eliminate the concept from supervisory materials and would align the change across the regulatory framework.

Banking agencies publish their 2026 stress-test scenarios

In February 2026, the FDIC, OCC, and Fed all finalized their hypothetical economic scenarios that large covered institutions must use for their upcoming annual stress tests. The scenarios apply to institutions with more than $250 billion in total consolidated assets and are required under the Dodd-Frank Wall Street Reform and Consumer Protection Act stress-testing framework. The supervisory scenarios include a baseline scenario aligned with private sector economic forecasts and a severely adverse scenario designed to evaluate banks’ resilience under significant economic stress.

Banking agencies clarify capital treatment of tokenized securities

On March 5, 2026, the FDIC, Fed, and OCC issued frequently asked questions clarifying the regulatory capital treatment of tokenized securities. The agencies stated that eligible tokenized securities, where ownership rights are represented using distributed ledger technology, generally should receive the same capital treatment as their nontokenized equivalents under existing capital rules. The guidance emphasizes that the capital framework is technology-neutral and that banks holding tokenized securities must continue to apply sound risk management practices and comply with applicable laws and regulations. The clarification signals regulators’ effort to address growing bank interest in digital asset infrastructure while maintaining consistent prudential standards.

OCC proposes rule to implement GENIUS Act stablecoin framework

On Feb. 25, 2026, the OCC issued a notice of proposed rulemaking to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The proposal would establish regulatory requirements for entities under OCC supervision that issue or engage in activities involving payment stablecoins, including expectations related to reserves, redemption, and risk management. Bank Secrecy Act (BSA), anti-money laundering, and Office of Foreign Assets Control sanctions will be addressed in separate rulemaking in coordination with the Department of Treasury. The rulemaking is intended to provide a clearer supervisory framework for banks participating in digital asset payment systems.

FinCEN launches webpage with whistleblower tips

On Feb. 13, 2026, the Financial Crimes Enforcement Network (FinCEN) announced the launch of a webpage with information on how individuals can submit whistleblower tips related to fraud, money laundering, and sanctions violations. The page outlines reporting options and resources tied to FinCEN’s whistleblower program, which allows individuals to provide information on potential violations of the BSA and related laws. The initiative aims to improve public awareness and facilitate reporting of illicit financial activity.

From the Financial Accounting Standards Board (FASB)

FASB discusses targeted hedge accounting improvements

At its Feb. 25, 2026, meeting the FASB added a project to its agenda to address targeted improvements to hedge accounting. Tentative decisions include permitting hedges of interest rate risk on held-to-maturity debt securities, removing the overnight index swap component from the secured overnight financing rate benchmark, and revising requirements for net investment hedges to allow certain float-to-float cross-currency swaps with different reset dates when repricing occurs frequently enough to reflect market rates. The amendments would apply to all entities, be applied prospectively with early adoption permitted, and require transition disclosures consistent with Topic 250. The board directed staff to draft a proposed Accounting Standards Update for a 60-day public comment period.

From the Securities and Exchange Commission (SEC)

SEC clarifies crypto and the federal securities laws

On March 17, 2026, the SEC issued an interpretation clarifying how federal securities laws apply to crypto assets and related transactions. The agency said the guidance is intended to give market participants a clear understanding of how it treats crypto assets under existing laws and to “draw clear lines in clear terms.” It also outlines how different types of crypto assets and activities fit within current securities law requirements.

SEC chair discusses artificial intelligence and disclosure considerations

On March 4, 2026, Chair Paul Atkins delivered remarks at the Financial Stability Oversight Council’s Artificial Intelligence Innovation Series Roundtable addressing the use of AI in financial markets. Atkins emphasized that existing principles-based disclosure requirements rooted in materiality should guide how public companies disclose developments related to AI, noting that disclosure should focus on whether information would be important to a reasonable investor. He also remarked on the SEC’s efforts to incorporate AI into regulatory activities such as risk assessments, market surveillance, and disclosure review. at the Financial Stability Oversight Council’s Artificial Intelligence Innovation Series Roundtable addressing the use of AI in financial markets. Atkins emphasized that existing principles-based disclosure requirements rooted in materiality should guide how public companies disclose developments related to AI, noting that disclosure should focus on whether information would be important to a reasonable investor. His remarks also discussed the SEC’s efforts to incorporate AI into regulatory activities such as risk assessments, market surveillance, and disclosure review.

SEC and CFTC announce memorandum of understanding on regulatory coordination

On March 11, 2026, the SEC and the Commodity Futures Trading Commission (CFTC) announced a memorandum of understanding (MOU) to enhance coordination between the two agencies on matters of shared regulatory interest. The MOU establishes a framework for information sharing and collaboration related to oversight of securities and derivatives markets, including emerging technologies and digital assets.

SEC proposes amendments to Exchange Act Rule 15c2-11

On March 16, 2026, the SEC proposed amendments to Securities Exchange Act of 1934 (Exchange Act) Rule 15c2-11, which governs the publication or submission of quotations for certain over-the-counter securities by broker-dealers. Akins stated, “This proposal would clarify regulatory obligations when publishing quotations and affirm what was always understood: Rule 15c2-11 applies to equity securities.”

Comments on the proposed amendments are due 60 days after publication in the Federal Register.

SEC commissioner addresses regulatory considerations for stablecoins

On Feb. 19, 2026, Commissioner Hester Peirce released a statement on regulatory considerations related to stablecoins. She addressed the treatment of payment stablecoins and included a link to frequently asked questions related to the application of the broker-dealer net capital rule to payment stablecoins.

SEC to hold roundtable on options market structure reform

The SEC announced it will hold a public roundtable on April 16, 2026, to discuss listed options market structure. Topics will include facilitating competition in a quote-driven market, evaluating customer experience, and identifying opportunities and challenges for continued market growth. The roundtable will be open to the public, and the SEC is accepting comment letters from the public.

Corp Fin issues updated C&DIs

On Feb. 17, 2026, the SEC’s Division of Corporation Finance (Corp Fin) published several Compliance and Disclosure Interpretations (C&DIs). The updates provide clarification regarding the application of certain Securities Act requirements and include C&DIs related to crowdfunding exemptions and associated disclosure requirements.requirements.

On March 6, 2026, Corp Fin published additional C&DIs addressing the exemption for offers and sales of securities pursuant to certain compensatory benefit plans and contracts, Securities Act forms, and Item 102 of Regulation S-K.

SEC adopts final rule implementing HFIA Act

On Feb. 27, 2026, the SEC adopted final rules to implement the Holding Foreign Insiders Accountable Act (HFIA Act), which increases transparency into the holdings and transactions of insiders of foreign private issuers (FPIs). Beginning March 18, 2026, directors and officers of FPIs who beneficially own more than 10% of any class of an FPI’s equity securities registered under Section 12 of the Exchange Act must report their holdings and transactions in the issuer’s equity securities through Section 16 reports.

On March 9, 2026, Corp Fin released FAQs related to the implementation of the HFIA Act.

From the Public Company Accounting Oversight Board (PCAOB)

PCAOB launches new audit practitioner fellowship program

On March 13, 2026, the PCAOB announced the Audit Practitioner Fellowship Program in the Office of the Chief Auditor. The new program is designed to bring additional experienced auditors with recent practical experience to the PCAOB to share their unique expertise with PCAOB staff.

Selected candidates will be hired for a two-year term to engage on the PCAOB’s new and existing standards and to provide insights into emerging issues.

From the American Institute of CPAs (AICPA)

AICPA issues guide on evaluating AI models for business use

On March 1, 2026, the AICPA released “Step-by-Step Guide to Evaluating and Selecting AI Models for Business,” which outlines a structured framework organizations can use when assessing artificial intelligence solutions. The guide describes key phases in the evaluation process, including defining business requirements, assessing data readiness and technical infrastructure, selecting appropriate model types and vendors, conducting pilot testing, and planning for implementation. The resource is intended to help organizations make more informed decisions when adopting AI technologies and managing related risks.

From the Center for Audit Quality (CAQ)

CAQ addresses building trust in the digital asset ecosystem

A March 1, 2026, post from the CAQ addresses the growing presence of digital assets in the financial system and the importance of trust and transparency as the ecosystem evolves. The article notes that while digital asset use among U.S. public companies remains relatively limited, 9% of S&P 500 companies referenced digital assets in their 2024 Form 10-K filings, with more than half of those companies in the financial services sector. The post also highlights increasing industry exposure and evolving regulatory activity, including recent legislation establishing a regulatory framework for stablecoins. The CAQ emphasizes that audits and attestation engagements can play an important role in enhancing the reliability of information reported about digital asset activities as the market continues to develop.

Portions of AICPA materials reprinted with permission. Copyright 2026 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.