October 2025 Financial Reporting, Governance, and Risk Management

OCC and FDIC issue proposals on financial and reputation risks

On Oct. 7, 2025, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) issued joint notices of proposed rulemaking (NPR) to continue their efforts to refocus supervision on material financial risks and to prohibit agencies from criticizing financial institutions on the basis of reputation risk.

The first NPR aims to clarify and standardize enforcement and supervisory practices under 12 U.S. Code 1818 by defining “unsafe or unsound practice,” prioritizing material financial risks, unifying how agencies issue matters requiring attention and supervisory observations, and tailoring enforcement actions accordingly.

The second NPR would define “reputation risk” and bar agencies from taking or directing actions against institutions or customers based on reputation concerns, political views, or lawful but politically disfavored activities.

Comments for both NPRs are due 60 days after publication in the Federal Register.

OCC announces supervisory changes for community banks

On Oct. 6, 2025, the OCC announced several supervisory initiatives aimed at easing burdens on community banks. Among the initiatives is a plan to remove fixed examination requirements for community banks and replace them with a more tailored and risk-based supervisory approach. Other actions address the tailoring of model risk management, changes to the supervision of retail nondeposit investment products, and issuance of two NPRs on fair lending data requirements and the expansion of the asset threshold for expedited licensing requirements.

OCC announces actions to depoliticize the federal banking system

On Sept. 8, 2025, the announced actions to eliminate politicized or unlawful debanking activities. In Bulletin 2025-22 “Licensing and Community Reinvestment Act: Consideration of Politicized or Unlawful Debanking,” the OCC clarifies how it will factor politicized or unlawful debanking into its review of banks’ licensing applications and Community Reinvestment Act (CRA) performance evaluations, consistent with a presidential executive order to guarantee fair banking.

OCC comptroller speaks on regulatory and supervisory framework

On Sept. 10, 2025, OCC Comptroller Jonathan Gould provided remarks at the Financial Stability Oversight Council on resetting the risk tolerance of the federal banking system. In his remarks, Gould outlined reforms in three key areas: chartering, regulation, and supervision. On chartering, he laid out a policy in which the federal banking system is no longer stagnant, but instead diverse in nature and dynamic in scope of activities. On regulations, Gould said the OCC will be focused on capital and liquidity reforms in partnership with the other banking agencies. And on supervision, he said the OCC will tailor supervisory frameworks with a special focus on those for community banks.

FDIC acting chair addresses regulatory and supervisory approach

On Sept. 10, 2025, FDIC acting Chair Travis Hill outlined a broad program of reforms underway to transform the agency’s regulatory and supervisory approach. Specifically, he noted how the FDIC has been working to shift away from process-driven oversight toward focusing on a bank’s core financial risks.

FDIC acting chair nominated as chair

On Sept. 30, 2025, President Donald Trump nominated Hill as chair of the FDIC, pending Senate confirmation. Prior to becoming acting chair on Jan. 20, 2025, Hill served as vice chair of the FDIC.

Fed governor sworn in

On Sept. 16, 2025, Stephen Miran was sworn in as a member of the Board of Governors of the Federal Reserve (Fed). He will serve the remainder of Andriana Kruger’s term, which will end on Jan. 31, 2026.

Federal banking agencies announce public outreach meeting for regulation review

On Sept. 9, 2025, the FDIC, OCC, and Fed announced they will hold public outreach meetings on Oct. 30, 2025, as part of the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) requirements. The meeting is an opportunity for interested stakeholders to present their views on regulatory categories, including applications and reporting; powers and activities; international operations; consumer protection; directors, officers, and employees; money laundering; rules of procedure; safety and soundness; securities; banking operations; capital; and the CRA.

Agencies issue guidance on NFIP loans during hiatus

On Oct. 1, 2025, the FDIC, along with the OCC, Fed, National Credit Union Administration (NCUA), and Farm Credit Administration, reminded institutions that they may continue making loans subject to federal flood insurance laws during lapses in the National Flood Insurance Program (NFIP). While insurance coverage is not required during the lapse, lenders must still complete flood determinations, provide borrower notices, and manage compliance and risk obligations. The statement also emphasized that private flood insurance remains an acceptable alternative.

OCC reports Q2 2025 bank trading revenue and mortgage performance

On Sept. 25, 2025, the OCC published its Q2 2025 trading revenue report, showing a 10.7% increase quarter over quarter and a 2.2% rise year over year, reflecting stronger trading activity. In addition, on Sept. 24, the OCC issued its Mortgage Metrics Report, noting that 97.5% of mortgages were current, up from 97.3% a year earlier, with an overall decline in serious delinquencies. The report still flagged modest signs of borrower stress and increased loan modifications, making it a key reference for institutions with significant mortgage portfolios.

NCUA insures shares during shutdown

On Sept. 30, 2025, the NCUA reassured credit union members that their insured shares remain fully protected up to the statutory limit, even if the federal government closes due to a lapse in appropriations. The agency emphasized that federally insured credit unions will remain open, continue normal operations, and provide uninterrupted access to member accounts.

NCUA eliminates use of reputational risk in supervision

On Sept. 25, 2025, the NCUA announced it will no longer use “reputation risk” or equivalent concepts in its examination and supervisory framework, following other federal supervisory agencies. The agency explained that removing this factor will help reduce ambiguity for credit unions and ensure supervisory focus remains on quantifiable financial and operational risks.

FinCEN postpones residential real estate reporting rule compliance

On Sept. 27, 2025, Financial Crimes Enforcement Network (FinCEN) announced a postponement of the effective date for its new residential real estate transaction reporting rule, moving the compliance deadline to March 1, 2026. The rule, originally set to take effect on Jan. 1, 2026, will require certain businesses involved in residential real estate closings and settlements to report beneficial ownership information for all-cash transactions.

FASB issues guidance on derivative accounting and customer share-based noncash consideration

On Sept. 29, 2025, the FASB issued Accounting Standards Update (ASU) 2025-07, “Derivatives and Hedging (Topic 815) and Revenue From Contracts With Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration From a Customer in a Revenue Contract,” to address concerns raised in the 2021 Agenda Consultation that Topic 815’s “derivative” definition was applied too broadly. Stakeholders noted difficulties applying the definition and scope exceptions to contracts that do not resemble traditional derivatives. The ASU expands the scope exception in Topic 815 by excluding from derivative accounting any non-exchange-traded contracts whose underlyings are based on operations or activities specific to one of the parties (for example, regulatory approvals, sales or earnings measures, emissions targets, or litigation outcomes). The ASU also clarifies that share-based noncash consideration received from a customer in a revenue contract is accounted for under Topic 606 until the right to receive or retain that consideration is unconditional, at which point other topics apply.

The amendments are effective for all entities for annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted.

For additional information, see the Crowe articles “FASB Issues Derivatives Scope Refinements,” and “Accounting for Share-Based Payment From Customers.”

FASB issues ASU on internal-use software accounting

On Sept. 18, 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” to modernize recognition by eliminating prescriptive project stages and requiring capitalization of internal-use software costs only after 1) management authorizes and commits to funding the project and 2) it is probable the software will be completed and used as intended (probable-to-complete recognition threshold). To meet the probable-to-complete threshold, management must conclude “significant development uncertainty” is not present. Entities also must evaluate and, if present, resolve significant development uncertainty, limited to 1) novel or unproven functionality not yet resolved through coding and testing and 2) situations in which significant performance requirements have not been identified or continue to be substantially revised.

The ASU supersedes stand-alone website-development guidance by incorporating relevant requirements into Subtopic 350-40 and clarifies that property, plant, and equipment disclosures in Subtopic 360-10 apply to all capitalized internal-use software (and that the intangibles disclosures in Subtopic 350-30 do not).

The amendments are effective for all entities for annual reporting periods beginning after Dec. 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period.

For additional information, see the Crowe article “FASB Revises Internal-Use Software Cost Guidance.”

FASB proposes guidance on PIK dividends on equity-classified preferred stock

On Sept. 30, 2025, the FASB issued a proposed ASU, “Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock,” to reduce diversity in practice by prescribing how issuers initially measure paid-in-kind (PIK) dividends. While rare in the banking industry, the proposal might have applicability in other financial services entities. The proposal would require PIK dividends on equity-classified preferred stock (including instruments classified as temporary equity) to be initially measured using the stated PIK dividend rate in the instrument (for example, rate multiplied by liquidation value). The amendments would not change when PIK dividends are recognized.

Comments are due Oct. 27, 2025.

CorpFin releases Q&A for government shutdown

On Oct. 1, 2025 (updated Oct. 9, 2025), the SEC’s Division of Corporation Finance (CorpFin) announced the impact of a federal government shutdown on its operations, including a Q&A section. It notes that EDGAR will continue to accept filings, but staff will not declare registration statements effective or qualify Form 1-A offerings.

SEC issues policy statement

On Sept. 17, 2025, the SEC issued a policy statement that indicates mandatory arbitration clauses for investor claims under the federal securities laws no longer affect staff decisions on whether or not to accelerate a registration statement. Rather, the staff will focus on whether the registration statement contains adequate disclosures.

SEC updates Financial Reporting Manual

On Aug. 28, 2025, CorpFin issued updates to the Financial Reporting Manual, incorporating revisions to align with amendments to Regulation S-X, updates to MD&A, selected financial data, and PCAOB-related guidance.

SEC and CFTC coordinate oversight

On Sept. 5, 2025, the SEC and the Commodity Futures Trading Commission (CFTC) issued a joint statement focused on harmonizing oversight across securities and derivatives markets, including crypto assets, decentralized finance (DeFi), and other emerging financial products. The agencies noted that greater alignment is needed as financial products converge and emphasized the importance of coordinated regulation to support innovation and maintain U.S. market competitiveness.

SEC combats cross-border fraud

On Sept. 5, 2025, the SEC announced the formation of a Cross-Border Task Force within its Division of Enforcement to enhance detection and enforcement of fraud involving foreign issuers seeking access to U.S. markets.

SEC releases draft taxonomies

The SEC released its draft 2026 taxonomies. The SEC staff encourage public review with feedback due no later than 4 p.m. Eastern on Nov. 12, 2025.

SEC amends Rules of Practice

On Sept. 17, 2025, the SEC adopted final amendments to its Rules of Practice, refining procedural requirements for reviews of staff actions taken under delegated authority. The amendments provide that certain staff actions in determinations of the effectiveness of registration statements and post-effective amendments, and determinations of the qualification of offering statements and post-qualification amendments under Regulation A will no longer be automatically stayed when a petition for SEC review is filed.

SEC seeks comments on RMBS and ABS disclosures

On Sept. 26, 2025, the SEC issued a concept release soliciting public comment on enhancements to disclosures for residential mortgage-backed securities (RMBS) and improvements to the asset-backed securities (ABS) registration regime. Chair Paul Atkins issued a statement accompanying the concept release, noting barriers to public RMBS offerings and soliciting suggestions for revised disclosure and regulatory definitions.

PCAOB publishes SPAC IPO auditor data

On Oct. 1, 2025, the PCAOB released “Data Points: Auditors of SPACs at IPO,” which analyzes 1,291 special purpose acquisition company (SPAC) IPOs listed on U.S. exchanges from January 2015 through August 2025. The report finds that more than 90% were audited by firms outside the six largest global networks with two nonaffiliated firms conducting more than three-quarters of these audits, underscoring notable concentration in the SPAC audit market. The report also highlights that SPAC IPO activity peaked during 2020-2021, with approximately 87% of SPACs based in the United States at the time of their IPOs.

PCAOB addresses electronic audit evidence

On Sept. 18, 2025, the PCAOB issued a board policy statement clarifying how auditors should implement paragraph .10A of new Auditing Standard (AS) 1105, “Audit Evidence,” which is effective for audits of fiscal years beginning on or after Dec. 15, 2025. The standard requires auditors to understand the source of electronic information provided by a company from external parties as well as the company’s processes for receiving, maintaining, and processing the information, including any modifications. Auditors must then either test the information for modifications or test the relevant controls, such as IT general controls and automated application controls. The policy emphasizes that these requirements are principles-based and scalable, and auditors are not required to perform additional testing if the risk of modification is no more than remote.

Subsequently, on Oct. 1, 2025, the PCAOB issued staff guidance that provides illustrative examples of the application of paragraph .10A of AS 1105.

PCAOB highlights broker-dealer review engagements

The PCAOB on Sept. 11, 2025, issued a new staff publication, “Broker-Dealer Audit Focus: Review Engagements Regarding Exemption Reports,” which emphasizes recurring deficiencies observed in reviews performed under PCAOB Attestation Standard No. 2. The publication outlines common challenges in compliance, offers reminders of auditors’ responsibilities under the standard, and shares observed good practices. The aim is to promote higher audit quality and support investor protection by ensuring these reviews meet the applicable standards.

PCAOB holds Investor Advisory Group meeting

At its Sept. 25, 2025, meeting, the PCAOB Investor Advisory Group (IAG) presented information on private market valuations, internal controls of financial reporting, and decision-useful critical audit matters. The IAG also received an update on foreign inspections from the Division of Registration and Inspections.

AICPA & CIMA updates digital practice aid

On Sept. 2, 2025, the AICPA and CIMA released an updated Accounting for and Auditing of Digital Assets practice aid. The update introduces a new chapter addressing considerations for crypto intangible asset lending and borrowing, including illustrative examples of substantive audit procedures for both lenders and borrowers. The guidance highlights key factors such as whether borrowers are required to post collateral and provides practical insights to help practitioners navigate complex audit and accounting issues in this emerging area. While nonauthoritative, the practice aid offers timely resources to support consistency and quality in applying existing accounting and auditing standards to digital asset transactions.

CAQ provides tool to assess external auditors

The CAQ on Oct. 9, 2025, released an external auditor assessment tool for audit committees, designed to guide and enhance committees’ oversight of external auditors. The tool features a structured questionnaire related to four areas – audit team quality, firm-level resources, auditor communications, and independence and skepticism – and encourages committees to gather input from internal stakeholders, benchmark practices, and promote open dialogue with auditors. In combining practical sample questions with references to applicable U.S. auditing and disclosure standards, the publication seeks to help audit committees make informed evaluations and strengthen audit quality.