Dive Insight:

The clarification is relatively minor but notable because the update is one of the most closely watched changes to accounting guidance recently issued by the FASB. Compliance with DISE “isn’t going to be cheap” for many firms but the FASB has taken steps to reduce the cost to preparers, board member Fred Cannon told CFO Dive previously.

After the DISE update was issued in November, the board was asked for clarification because the original guidance on its effective date might have mistakenly been interpreted as requiring companies with non-calendar annual reporting periods to first comply in a quarterly or interim reports, according to the update.

“The Board’s intent in the basis for conclusions of Update 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027,” the update states. “However, the Board acknowledges that there was ambiguity between the intent in the basis for conclusions in Update 2024-03 and the transition guidance that was included in the Codification when Update 2024-03 was issued.”

The FASB almost always requires that companies first comply with new standards in more comprehensive annual reports before it requires them in less comprehensive and unaudited quarterly reports, Jack Castonguay, an associate professor of public accounting at Hofstra University, said in an email. “The original language of ASU 2024-03…goes against the FASB’s usual approach,” but the new language removes that ambiguity, he said.