The Financial Accounting Standards Board (FASB) removed all references to the Concepts Statements in its Accounting Standards Update (ASU) 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements.
The Concepts Statements are nonauthoritative and are used by the Board to develop standards of financial accounting and reporting. This update removes all references to the Concepts Statements, aiming to simplify the Codification and clarify the distinction between authoritative and nonauthoritative literature.
The amendments likely won’t result in significant accounting changes for most entities, but reporting entities should review the ASU to assess any potential impacts. Learn more below about the following to help your business navigate these changes effectively:
- The amended guidance
- Effective dates
- Transition requirements
Who Is Affected by the Amended Guidance in ASU 2024-02?
The amendments affect a variety of topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance.
As the amendments affect a variety of topics in the Codification, reporting entities are encouraged to review the ASU in its entirety to assess any accounting effect that the removed references may have.
As the Concepts Statements are nonauthoritative and all references are removed from the Codification, reporting entities should avoid relying on the Concepts Statements to substantiate accounting conclusions.
Effective Dates
The amendments aren’t intended to result in significant accounting change for most entities; the transition guidance is provided for those entities where the removed references to the Concepts Statements may result in accounting changes.
For public business entities, the amendments are effective for fiscal years beginning after December 15, 2024.
For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025.
Early application is permitted for all entities for any fiscal year or interim period for which financial statements haven’t yet been issued or made available for issuance. If adopted in an interim period, the amendments must be adopted as of the beginning of the fiscal year that includes that interim period.
Transition Requirements
The amendments should be applied either:
- Prospectively to all new transactions recognized on or after the date the entity first applies the amendments
- Retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied
If applied retrospectively, an entity should adjust the opening balance of retained earnings—or other appropriate components of equity or net assets in the statement of financial position—as of the beginning of the earliest comparative period presented.
We’re Here to Help
If you have questions about the amended guidance in ASU 2024-02 and how it could impact accounting for your business, contact your Moss Adams professional.