Who Should Read This Article and Why
This article is written specifically for finance professionals, lenders, borrowers, and clients of Bennett Financials. Understanding the latest accounting standard updates is crucial for these audiences because changes in financial reporting directly impact how liquidity, performance, and risk are explained and interpreted. Whether you are making credit decisions, managing compliance, or preparing financial statements, staying informed about new standards ensures you can anticipate their implications, maintain transparency, and support sound strategic decisions.
Accounting standard updates rarely arrive as a single “big bang.” More often, they show up as a steady stream of targeted amendments that—taken together—change how finance teams explain liquidity, performance, and risk. This article covers the latest accounting standard updates and their implications for Bennett Financials and its clients. Heading into 2026 planning cycles, three themes are especially relevant: (1) tighter transparency around financing structures and liquidity, (2) clearer rules on liability classification and sale-and-leaseback measurement, and (3) major, forward-looking reforms to how performance is presented and explained in the income statement.
This article summarizes the most consequential recent IFRS Accounting Standards developments that are already effective (and therefore affecting the numbers and disclosures now), plus the near-term “next wave” that organizations should be preparing for. It’s written with a Bennett Financials lens: practical implications for lenders, borrowers, finance teams, and anyone relying on statements to make credit, investment, or strategic decisions.
Introduction to Accounting Standards
The Financial Accounting Standards Board (FASB) is the primary authority responsible for establishing and updating accounting standards in the United States. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the FASB Codification. ASUs are not authoritative standards. The FASB’s Accounting Standards Codification is the authoritative source of accounting principles generally accepted in the United States (US GAAP). Through the FASB Accounting Standards Codification (ASC), the Board consolidates all U.S. Generally Accepted Accounting Principles (GAAP) into a single, organized source. The FASB updates the Accounting Standards Codification with Accounting Standards Updates. This codification is essential for ensuring that financial statements are transparent, consistent, and comparable across business entities.
Accounting Standards Updates (ASUs) are issued regularly to address emerging issues and refine guidance on a wide range of topics, including financial instruments credit losses, tax credit structures, and financial services insurance. These updates are designed to enhance the quality of financial reporting, providing clarity on complex areas such as equity securities subject to contractual sale restrictions, income tax disclosures, and fair value measurement. Both public business entities and non-public entities must adhere to these evolving standards, which play a critical role in shaping how financial instruments, equity securities, and other key items are reported. Staying current with the FASB accounting standards codification is vital for any organization aiming to maintain compliance and deliver reliable financial information.
With this foundational understanding of accounting standards, let’s explore how the FASB Accounting Standards Codification organizes and updates authoritative guidance.
Accounting Standards Codification Overview
The FASB Accounting Standards Codification (ASC) serves as the comprehensive framework for authoritative accounting standards in the United States. The ASC organizes all relevant guidance into a single, accessible structure, covering key areas such as financial instruments, revenue recognition, and lease accounting. Accounting Standards Updates (ASUs) are issued to keep the codification current, ensuring that accounting standards evolve in response to new business practices and regulatory requirements.
Key topics within the ASC include Topic 606 (Revenue from Contracts with Customers), which governs revenue from contracts, and Topic 842 (Leases), which addresses lease accounting. The codification also provides detailed guidance on financial reporting for a wide range of transactions and industries. By regularly consulting the ASC and staying up to date with new ASUs, organizations can maintain compliance with GAAP and produce financial statements that meet the highest standards of accuracy and transparency. The FASB website offers access to the ASC, ASUs, and additional resources to support business entities in their ongoing financial reporting and accounting efforts.
With the codification framework in place, we now turn to the most impactful recent updates and their practical implications.
Liquidity Transparency Is the Headline: Supplier Finance Programs Disclosures (IAS 7 / IFRS 7)
Many organizations use supplier finance arrangements (sometimes described as reverse factoring, payables finance, or similar structures) to extend payment terms or manage working capital. These arrangements are also referred to as supplier finance programs in the context of financial disclosures and obligations, highlighting the need for transparency regarding related liabilities and reporting requirements. Investors and lenders have increasingly asked a simple question: “Is this trade payables… or is it financing?” The IASB’s response was to require new, specific disclosures so users can understand the impact on liabilities, cash flows, and liquidity risk.
What changed. Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures introduce additional disclosures for entities that enter into supplier finance arrangements, and they are effective for annual reporting periods beginning on or after 1 January 2024.
Why it matters to Bennett Financials:
- For credit analysis, these disclosures can change how we interpret working-capital stability, refinancing risk, and near-term liquidity pressure.
- For clients, the standard effectively raises the bar on documenting program terms, liability presentation judgments, and cash-flow effects—reducing the chance that supplier finance is misunderstood as “free working capital.”
Practical implementation notes (what teams tend to underestimate):
- Scoping and identification: Programs may exist across geographies and subsidiaries, sometimes set up by procurement rather than treasury.
- Data completeness: Terms, outstanding amounts, and payment timing often sit outside the general ledger.
- Narrative consistency: Lenders and rating agencies will compare these disclosures against covenant definitions and management commentary.
A Bennett Financials-ready takeaway: if supplier finance is material, treat the new disclosures like a mini-liquidity project—not a footnote update.
With enhanced liquidity disclosures in place, other areas such as lease accounting have also seen important updates.
Sale-and-Leaseback Got More Exacting: IFRS 16 Lease Liability Measurement
Sale-and-leaseback transactions are popular for capital management, real estate monetization, and balance sheet optimization. But variability in leaseback payments (especially variable payments not tied to an index/rate) created uncertainty about how the seller-lessee should subsequently measure the lease liability without accidentally recognizing gains or losses that IFRS intends to defer.
What changed. The IASB issued amendments on Lease Liability in a Sale and Leaseback, requiring seller-lessees to measure the lease liability in a way that avoids recognizing gains/losses related to the retained right-of-use. The amendments apply for annual periods beginning on or after 1 January 2024 (earlier adoption permitted).
Why it matters to Bennett Financials:
- For borrowers using sale-and-leaseback to manage leverage, the amended model can change the pattern of expense and the recognized liability, which can ripple into covenant metrics.
- For Bennett Financials’ own analysis, it improves comparability: transactions that previously produced “odd” post-transaction accounting should now converge toward more consistent outcomes.
Common trouble spots:
- Complex leaseback terms (variable payments, step rents, non-lease components).
- Systems that were not designed to track the “do not recognize the deferred gain” mechanics.
- Interactions with IFRS 15 (whether the transfer is a sale in the first place).
As lease accounting becomes more precise, liability classification and the impact of covenants are also under the spotlight.
Current vs Non-Current Liabilities Got Sharper: IAS 1 Classification (Including Covenants)
If your right to defer settlement depends on meeting covenants, classification can become a high-stakes judgment call—especially for entities with refinancing activity or tight headroom.
What changed. The IASB finalized amendments to IAS 1 Presentation of Financial Statements clarifying the requirements for classifying liabilities as current or non-current, with an effective date for annual periods beginning on or after 1 January 2024. The related refinements about covenants (often discussed as “non-current liabilities with covenants”) aim to improve information when deferral rights are subject to covenant compliance.
Why it matters to Bennett Financials: Discover working capital strategies for service businesses that directly impact our financial best practices.
- From a lender perspective, this reduces the “surprise factor” where liabilities appear non-current despite near-term covenant pressure, or appear current because of technicalities that don’t reflect refinancing realities.
- For clients, it’s a reminder that loan agreements and reporting dates matter. Classification turns on rights and conditions at the reporting date, not on post-period intentions.
Implementation reality check:
- This is not just “presentation.” A classification shift can affect perceived liquidity, trigger stakeholder questions, and require enhanced disclosures.
- Finance teams should coordinate with treasury and legal to ensure that covenant testing and waiver mechanics are understood and documented.
With liability classification clarified, global tax reforms are also driving new disclosure requirements.
Pillar Two Tax Reform: IAS 12 Amendments and Income Tax Disclosures (and Why Disclosures Matter Even When Numbers Don’t Move)
Even if an entity’s effective tax rate doesn’t immediately swing, global minimum tax rules can create disclosure pressure and uncertainty around deferred tax accounting.
What changed. The IASB issued amendments to IAS 12 Income Taxes related to the OECD’s Pillar Two model rules, including a temporary exception to recognizing and disclosing deferred taxes arising from Pillar Two implementation, plus targeted disclosure requirements.
Why it matters to Bennett Financials:
- For multinational groups (or groups with cross-border structures), the key near-term challenge is often explaining exposure and readiness, not just calculating tax.
- Investors and lenders may ask for scenario impacts—especially where profitability is concentrated in jurisdictions likely to implement top-up taxes.
Practical steps:
- Identify in-scope entities and jurisdictions.
- Build a disclosure framework early: what you know, what you don’t, and what actions are underway.
- Align tax, finance, and risk narratives to avoid inconsistent messaging.
With tax disclosure requirements evolving, the next wave of change focuses on how performance is reported in financial statements.
The “Next Wave” Is Performance Reporting in Financial Statements: IFRS 18 (Effective 2027, Preparation Starts Now)
If the 2024-effective amendments are about liquidity and classification, IFRS 18 is about how performance is communicated—and it’s one of the most significant presentation standards changes in years.
What it is. IFRS 18 Presentation and Disclosure in Financial Statements was issued in April 2024 and is effective for annual reporting periods beginning on or after 1 January 2027. The IASB focused heavily on the statement of profit or loss to improve comparability and transparency for investors.
What will change in practice (high-level):
- New structure in the income statement with specified categories and required subtotals (improving comparability across companies).
- Management-defined performance measures (MPMs): if management uses non-IFRS subtotals in external communications, IFRS 18 requires disclosures to bring discipline and reconciliation to those metrics.
- Aggregation/disaggregation and note roles: a more principles-driven approach to how information is grouped, labeled, and explained.
Why Bennett Financials cares in 2026 (even though effective 2027):
- Clients may need a “shadow” income statement before adoption to understand how KPIs (EBIT, operating profit, adjusted measures) will be presented and reconciled.
- For Bennett Financials’ own analysis, IFRS 18 should improve peer comparability—but during transition years, we should expect mixed reporting styles across issuers.
A practical Bennett Financials recommendation: treat 2026 as a dry-run year—build mapping from current management reporting to IFRS 18-required subtotals and MPM disclosures.
As performance reporting standards evolve, some subsidiaries will benefit from reduced disclosure requirements.
Disclosure Relief Is Coming for Some Groups Under New Accounting Standards: IFRS 19
Not every update adds disclosure. IFRS 19 is designed to reduce disclosure overload—specifically for certain subsidiaries.
What it is. IFRS 19 Subsidiaries without Public Accountability: Disclosures was issued in May 2024 and permits eligible subsidiaries to apply IFRS Accounting Standards with reduced disclosure requirements.
Why it matters to Bennett Financials:
- For groups with many non-public subsidiaries, this can reduce reporting burden while maintaining IFRS recognition and measurement.
- For users of subsidiary financial statements (including some lenders), it may change the volume of disclosed detail—so analysts need to adjust information requests and due diligence routines accordingly.
The key is governance: deciding which entities are eligible, ensuring consistent application, and planning communications with stakeholders who expect “full IFRS-style” notes.
With disclosure relief available for some, understanding effective dates and transition requirements is essential for all.
Effective Dates and Transition
Navigating the effective dates of new accounting standards is a crucial part of financial reporting for both public and non-public companies. The FASB specifies when each Accounting Standards Update (ASU) becomes effective, and these dates can differ based on the type of business entity and the nature of the standard. Early adoption is generally permitted for all ASUs, but each ASU has specific transition guidance. Effective dates for ASUs generally differ for public and non-public entities. For example, ASU 2024-04, which addresses debt with conversion and other options, is effective for public business entities for fiscal years beginning after December 15, 2025. Many standards also allow for early adoption, giving organizations the flexibility to implement changes ahead of the mandatory timeline.
Effective Dates for ASUs
The effective date for each ASU is determined by the FASB and typically varies depending on whether the entity is a public business entity or a non-public entity. It is important to review the specific ASU to determine the applicable effective date for your organization.
Transition Guidance
However, early adoption and transition require careful planning. Each ASU includes specific transition guidance to help entities move from old to new accounting standards smoothly, minimizing disruption to financial statements and reporting processes. The FASB Accounting Standards Codification provides detailed instructions on effective dates and transition requirements, making it an essential resource for business entities preparing for upcoming changes.
Planning for Early Adoption
By proactively monitoring effective dates and understanding transition provisions, organizations can ensure compliance and avoid last-minute surprises. Early adoption is generally permitted for all ASUs, but each ASU has specific transition guidance.
With a clear understanding of effective dates and transition, let’s examine how contract accounting is evolving under recent updates.
Contract Accounting: What’s Changing and What to Watch
Recent updates to the FASB Accounting Standards Codification have brought significant changes to contract accounting, particularly in revenue recognition and the treatment of contract assets and liabilities.
Revenue Recognition Updates
For instance, ASU 2021-08 now requires acquirers in business combinations to recognize and measure contract assets and contract liabilities in accordance with Topic 606, aligning acquisition accounting with the latest revenue recognition principles. This ensures that financial reporting remains consistent and transparent, especially during mergers and acquisitions.
Segment Reporting Enhancements
Additionally, ASU 2023-07 has enhanced segment reporting by requiring more detailed reportable segment disclosures, particularly around significant segment expenses. This change helps stakeholders better understand the drivers of performance within different parts of a business.
Tax Equity Investments
Another notable update is the expanded use of the proportional amortization method for tax equity investments, as introduced by ASU 2023-02, which provides a more consistent approach to recognizing investment returns.
Staying informed about these updates is essential for accurate financial reporting and compliance with GAAP. By understanding the latest requirements for contract assets, contract liabilities, and segment reporting, organizations can ensure their financial statements reflect the true nature of their business combinations and ongoing operations.
With contract accounting updates in mind, let’s turn to recent changes affecting debt instruments and conversions.
Debt Instruments and Conversions: New Guidance and Implications
The FASB has recently issued important updates affecting the accounting for debt instruments and conversions, with a particular focus on convertible debt instruments.
Convertible Debt Guidance
ASU 2024-04 provides new guidance on accounting for induced conversions of convertible debt, clarifying how entities should recognize and measure these transactions. This is especially relevant for companies that issue convertible instruments as part of their capital structure.
Simplification of Convertible Instruments
In addition, ASU 2020-06 has simplified the accounting for convertible instruments and contracts in an entity’s own equity by eliminating certain complex models, such as those for beneficial and cash conversion features. These changes streamline financial reporting and reduce the risk of errors or inconsistencies.
Broader Implications
Entities must also consider the broader implications for financial instruments credit losses, derivatives and hedging, and contractual sale restrictions, as these areas can be affected by changes in how convertible instruments are accounted for.
By understanding and implementing the new guidance, organizations can ensure their financial statements accurately reflect the impact of convertible debt instruments and related transactions, supporting better decision-making and compliance with GAAP.
With debt instrument guidance clarified, it’s time to focus on practical steps for implementing these changes in your organization.
A Bennett Financials Implementation Playbook for 2026 Planning
Accounting changes are easiest when handled like a controlled program, not a year-end scramble. For example, when considering investment options such as fractional shares, it’s helpful to have a practical roadmap that Bennett Financials can use internally and with clients.
Step 1: Build a “standards impact inventory” (2–4 weeks)
- Identify all supplier finance arrangements, including programs, vendors, banks, and geographies.
- Isolate sale-and-leaseback transactions with variable or complex payment terms.
- List debt facilities and covenants affecting deferral rights and classification.
- Consider whether the entity qualifies as a public business entity, as this status may affect the applicability and effective dates of certain accounting standards.
Step 2: Decide what is accounting policy vs disclosure vs systems work
- Determine if supplier finance is primarily data and disclosure heavy.
- Assess if sale-and-leaseback requires model updates.
- Evaluate if IAS 1 classification is mainly contract interpretation plus disclosure.
Step 3: Run a “lender/investor lens” review
- Ask: what will a sophisticated user conclude after reading the updated disclosures?
- Would they interpret liquidity or leverage differently?
- If yes, plan messaging and management discussion accordingly.
Step 4: Prepare for IFRS 18 early (even if adoption is later)
- Map current P&L line items and management reporting to IFRS 18 subtotals, ensuring alignment with the relevant annual reporting period.
- Catalog MPMs used in decks, press releases, and investor materials.
- Draft reconciliations and narrative discipline now—before the standard forces it.
- Consider early application of new standards as part of your planning process, if permitted.
Step 5: Strengthen documentation
- For every area above, ensure the “why” is documented:
Why an arrangement is in scope/out of scope.
Why a liability is current/non-current.
Why a leaseback measurement approach complies with IFRS 16 amendments.
- Why an arrangement is in scope/out of scope.
- Why a liability is current/non-current.
- Why a leaseback measurement approach complies with IFRS 16 amendments.
- Entities must disclose the expected impact of adopting new FASB standards on their financial statements in their annual filings.
- Entities must disclose the expected impact of adopting the FASB’s new standards on their financial statements in their annual filings.
This reduces audit friction and speeds up close cycles.
With a structured implementation plan, organizations can turn compliance into a strategic advantage.
Closing: The Bennett Financials Angle—Turn Compliance into Clarity
The best accounting updates don’t just “check the box.” They make financial statements easier to understand and harder to misread. The 2024-effective changes push organizations to be more explicit about liquidity structures and financing pressures. The 2027-effective IFRS 18 will push for more comparable and transparent performance storytelling.
For Bennett Financials, the opportunity is twofold:
- Internally, refine our own financial reporting and analytical models so we can compare clients consistently across industries and structures.
- Externally, help clients anticipate how lenders, investors, and regulators will read the new disclosures—so there are fewer surprises and better financing conversations.
