Companies Want FASB to Focus on Crypto, ESG-Related Rule Making

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Finance executives call for clear guidance on key accounting issues as US standard setter weighs long-term priorities

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The companies, along with other stakeholders such as investors, auditors and academia, have weighed in on those priorities in letters to the FASB, which sets standards for public and private companies as well as nonprofits in the US.

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Businesses such as the telecommunications firm Charter Communications Inc.

and software firm Autodesk Inc.

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Are urging the FASB to make rules on a range of accounting issues. These include digital assets such as bitcoin and energy transactions—for example, renewable-energy certificates and carbon-offset credits, which companies can purchase and apply for their greenhouse gas emissions-reduction goals.

In both cases, there are currently no specific accounting rules for companies to follow. Some companies said in their comment letters that they expect transactions related to these sectors to become more important to their overall business in the future.

Charter Communications said the FASB should develop accounting guidance for carbon offsets as well as renewable-energy credits. A credit is earned for every megawatt of electricity that a company generates from a renewable-energy resource. Coin-based company Stamford said it is working towards becoming carbon-neutral and potentially effecting more energy-related transactions, but does not have a clear framework that will guide them.

“Uncertainty exists today as to whether … the accounting literature should be applied,” wrote Kevin Howard, chief accounting officer and controller of Charter Communications, in a September 22 letter.

Autodesk’s chief accounting officer, Stephen Hope, echoed this sentiment in a September 21 letter, noting that the lack of clear accounting guidance for renewable-energy credits and carbon offsets leads to inequitable financial reporting for investors.

In recent months, US regulators have prioritized new efforts against climate change. Securities and Exchange Commission Chairman Gary Gensler has asked his employees to write a rules proposal by the end of the year that would force businesses to disclose climate-related risks.

The companies are also pushing for fixed rules for accounting for bitcoin and other crypto assets, which have attracted the interest of regulators following the digital currency’s sharp volatility in recent months. Most finance majors have so far avoided investing corporate cash in crypto assets due to concerns about their market volatility.

Because there are no specific binding accounting rules, companies with crypto holdings currently classify them as indefinite intangible assets – similar to trademarks and website domains – following the non-binding guidelines of the Association of International Certified Professional Accountants. The FASB has decided against adding the issue to its agenda in recent years, saying that investing in cryptocurrencies is not widespread among companies.

Payment provider Square Inc., one of a handful of companies investing in bitcoin, has officially proposed allowing companies to classify assets as inventory if they plan to resell them. An alternative crypto accounting model could reduce companies’ reliance on performance metrics beyond generally accepted accounting principles, the company said.

“We think it is important that the economic essence of bitcoin transactions is reflected in the accounting model and per discussion with our stakeholders, which is currently not being completed,” Ajmere Dale, Square Chief Accounting Officer, wrote on September 22. “

Mark Maurer at [email protected]

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