The Financial Accounting Standards Board (FASB) has proposed an update to its interim reporting standard as part of its disclosure framework project aimed at improving the clarity, consistency, and effectiveness of financial statement disclosures.

The proposed amendments, announced Nov. 1, would reorganize all interim reporting requirements into Accounting Standards Codification Topic 270 and apply to all entities that prepare U.S. GAAP interim financial statements and notes.

The amendments are not intended to significantly change practice for interim reporting. They are based on language that was previously in the Securities and Exchange Commission’s Regulation S-X Rule 10-01 but removed in 2018, requiring disclosure of events occurring after the end of the most recent fiscal year that have a material effect.

Public companies already apply this rule, as do many private companies that prepare U.S. GAAP interim financial statements. However, there could be some changes to interim reporting practices for private companies and not-for-profits.

Under the proposal, interim disclosures would be required to include those listed in Topic 270, if material. This assessment would include considering whether there is a need to update the disclosures that were made in the prior annual financial statements. Interim disclosures would also be required when a significant event or transaction has occurred since the prior year-end that has a material effect on financial statements, even if that disclosure is not listed in Topic 270.

In addition, the amendments would clarify the form and content of interim financial statements and notes, including captions to be used in interim balance sheets and income statements and when condensed cash flow statements may be presented. They also indicate when comparative disclosures must be presented.

The amendments provide for three forms of U.S. GAAP interim reporting under Topic 270: financial statements and notes prepared in the same level of detail as the prior annual financial statements, financial statements prepared in the same level of detail as the prior annual financial statements but including limited notes based on Topic 270, and condensed financial statements with limited notes.

When condensed financial statements or limited notes are provided, the proposal requires companies to make their previous annual financial statements available to users of the interim statements and to disclose the interim financial statements should be read in conjunction with the previous annual financial statements and notes.

Comments on the proposal are due by Jan. 31, 2022. Companies would apply the proposed amendments prospectively. FASB has not yet determined an effective date or whether early adoption will be permitted but will consider feedback during the comment period.