Alert

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements.

The ASU isn’t intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements.

The amendments are intended to provide clarity about the current interim reporting requirements.

Scope

The amendments clarify that the guidance in Topic 270, Interim Reporting, applies to all entities that provide interim financial statements and notes in accordance with GAAP.

The amendments further clarify that for purposes of applying the guidance in Topic 270, the term financial statements and notes includes those financial statements that are a full set of financial statements.

In accordance with the guidance in Topic 205, Presentation of Financial Statements, a full set of financial statements for a period includes all of the following:

• Financial position at the end of the period
• Earnings—net income—for the period, which may be presented as a separate statement or within a continuous statement of comprehensive income
• Comprehensive income for the period in one statement or two separate but consecutive statements
• Cash flows during the period
• Investments by and distributions to owners during the period

Topic 270 doesn’t apply if an entity only issues limited information, such as a standalone income statement or selected account balances.

Key Provisions

The amendments create a centralized and comprehensive list of interim disclosure requirements required by existing GAAP.

Additionally, the ASU incorporates a disclosure principle and clarifies the form and content of interim financial statements.

Disclosure Principle

The amendments add a principle to Topic 270 that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

This principle is intended to help entities determine whether disclosures not explicitly specified elsewhere in Topic 270 should be provided in interim reporting periods.

It’s modeled after previous guidance applied to SEC registrants, essentially ensuring that interim financial statements remain informative and relevant.

Events that require disclosure under this principle include significant changes in:

• Accounting principles and practices
• Estimates used in the preparation of financial statements
• The status of long-term contracts
• Capitalization, including significant new borrowings or modification of existing financing arrangements
• The reporting entity resulting from business combinations or dispositions

Form and Content of Interim Financial Statements

As there is limited guidance under current GAAP, the amendments provide guidance to clarify the form and content of interim financial statements, separated by type of entity.

SEC registrants should refer to exiting SEC guidance, such as Rule 10-01 of Regulation S-X, when preparing interim financial statements.

For non-SEC registrants, there are two acceptable forms of interim financial statements and notes:

1. Financial statements presented using the same level of aggregation as the annual financial statements and notes.
2. Financial statements presented at a level more aggregated than the annual financial statements or that have limited notes subject to the disclosure requirements (condensed statements).

Condensed statements can only be provided if the previous annual financial statements have been issued.

If a non-SEC registrant presents interim condensed statements, the entity is required to follow the following form and content guidance:

• Statement of Financial Position: Separate captions are required for each balance sheet component presented in the annual financial statements that’s 10 percent or more of total assets. Cash and retained earnings must also be presented separately, regardless of the relative significance to total assets.
• Statement of Earnings: Separate captions must be included for net sales or gross revenue and for each cost and expense category presented in the annual financial statements that exceeds 20 percent of sales or gross revenues. The provision for income taxes and discontinued operations must also be presented.
• Statement of Cash Flows: The totals for each category of cash flow activities—operating, investing, and financing—is required to be presented. Cash at the beginning and end of each period and the increase or decrease in such balance must also be presented.
• Investments by and Distributions to Owners: An analysis of the changes in each caption presented in the statement of financial position must be included in a note or separate statement. The analysis of changes should be presented in the form of a reconciliation of the beginning balance to the ending balance for the reporting period. Investments by and distributions to owners should be presented separately.

The above requirement to provide a separate statement of changes in investments by and distributions to owners isn’t applicable to not-for-profit (NFP) entities. However, if an NFP entity presents interim condensed statements, the following additional requirements apply:

• Net assets with and without donor restrictions should be presented regardless of relative significance to total net assets.
• The required disclosure of expenses by nature and function may be condensed in accordance with Topic 270, whether presented on the face of the statement of activities, as a separate schedule in the notes to financial statements, or in a separate financial statement.

Effective Dates

For public business entities, the amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

For entities other than public business entities, the amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2028.

Early adoption is permitted.

Transition Requirements

The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

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