FASB Invites Stakeholders to Share Feedback on Accounting for Government Grants
The Financial Accounting Standards Board (FASB) recently published an Invitation to Comment (ITC) seeking input on potential GAAP guidance on recognition, measurement and presentation of government grants by businesses.
The ITC, titled Accounting for Government Grants by Business Entities: Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles, gives stakeholders the opportunity to provide feedback on whether IAS 20 represents a workable solution for improving GAAP in the U.S. financial reporting environment for business entities as it relates to the accounting for government grants. Stakeholders are encouraged to review and provide comment on the ITC by Sept. 12, 2022.
In 2021, the FASB issued the Invitation to Comment, Agenda Consultation, which asked stakeholders to weigh in on a broad range of issues, including whether the FASB should pursue a project on the recognition and measurement of government grants – and, if so, whether it should leverage an existing grant or contribution model or develop a new accounting model.
Approximately three-quarters of stakeholders who provided specific feedback on that question, including investors, practitioners, preparers and state-certified public accounting societies, preferred that the FASB leverage International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance.
In response to this feedback, the FASB Chair Richard R. Jones added a project, Accounting for Government Grants, Invitation to Comment, to the research agenda. Published as part of that research project, the government grants ITC solicits additional feedback from stakeholders on relevant requirements in IAS 20 and includes specific questions for investors about the importance and utility of government grants information to their analysis of a company’s financial performance.