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A standards update issued by the Financial Accounting Standards Board would do “substantial competitive harm to manufacturers in the U.S.” and should be withdrawn or delayed, the NAM told the Securities and Exchange Commission last week.

What’s going on: Under Accounting Standards Update 2023-09, companies will be required to disclose their income tax payments to foreign governments on a country-by-country basis.

• “Public disclosure of such tax data could undermine commercial confidentiality, enabling global competitors to discern private information about a U.S. company’s strategies, profits and performance that would undermine its competitiveness,” the NAM wrote in a letter to SEC Chief Accountant Kurt Hohl.
• The SEC approves the FASB’s budget and has oversight authority over the FASB.

NAM takes action: In 2023, the NAM urged the FASB to reconsider its proposed accounting standard and gave detailed recommendations, but the accounting regulator declined to make those changes.

An added burden: “ASU 2023-09 will be highly burdensome and impose substantial compliance costs on U.S. companies, especially given the limited time after the fiscal year end that corporate tax and accounting teams will have to prepare these more detailed financial statements,” the NAM explained to the SEC.

• “ASU 2023-29 will [also] create additional work and potential confusion by requiring companies to document their tax liabilities in a different manner [than] what companies now use for their Pillar Two tax reporting obligations.”

What should be done: The SEC should direct the FASB “to withdraw or delay the effectiveness of ASU 2023-09 before companies prepare to file their fiscal year 2025 financial statements,” the NAM concluded.