🔍 Private Credit and Debt Disclosures
The FASAC meeting kicked off with a deep dive into private credit and debt disclosures. Council members debated whether current GAAP requirements give investors enough info on private credit arrangements. Spoiler alert: Opinions varied.
Some members felt that borrowers and lenders already have cozy relationships that allow for extra info sharing beyond GAAP. Others argued that more transparency about borrowers' credit quality and off-balance sheet arrangements could be beneficial. Middle market vs. large, sophisticated borrowers—the needs differ, but the call for improved liquidity disclosures for private companies was loud and clear.
🤔 Business Combinations
Next up, business combinations took the stage. Council members weighed in on whether GAAP needs a facelift to better handle modern business transactions. Turns out, most folks think the current guidelines are doing just fine.
However, explaining the different accounting outcomes for transactions that seem economically similar? That's a head-scratcher. For example, loan acquisitions in the Fintech industry often get tagged as asset acquisitions, even though the acquirer controls the value chain. The takeaway? Investors want clarity on what was acquired, the price tag, and the performance of the new entity.
🌐 Current Trends and Changing Business Practices
The discussion then shifted to current trends and changing business practices. Council members pondered whether financial reporting needs to evolve to keep pace with geopolitical, economic, and regulatory shifts.
Some members felt that the existing disclosure requirements are solid, even during market turbulence. Others suggested that guidance on tax law changes, inflationary economies, and going concern assessments could use a refresh. Risk and uncertainty disclosures—adequate but challenging during unpredictable times.
