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

Executives at large public companies want the Financial Accounting Standards Board to write rules on how to treat cryptocurrency assets and transactions related to environmental, social and governance issues.

The U.S. accounting standard setter in June launched an agenda consultation, its first in five years, seeking the public’s views on what its long-term priorities should be. Depending on the feedback, the FASB could consider new accounting projects. The board in the coming months expects to discuss its staff’s summary of the public’s responses, which were due late last month, a FASB spokeswoman said.

Companies—alongside other stakeholders such as investors, auditors and academics—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 U.S.

Businesses such as telecommunications firm

Charter Communications Inc.

and software firm

Autodesk Inc.

are urging the FASB to pursue rule making 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 toward their greenhouse gas emissions-reduction targets.

In both cases, there are currently no specific accounting rules for companies to follow. Some companies in their comment letters said they expect transactions related to these areas to become more significant 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. One credit is earned for every megawatt-hour of electricity that a company generates from a renewable-energy resource. The Stamford, Conn.-based company said it is working toward becoming carbon-neutral and potentially striking more energy-related transactions, but doesn’t have a clear framework that would guide those.

“Uncertainty exists today on what…accounting literature to apply,”

Kevin Howard,

Charter Communications’ chief accounting officer and controller, wrote in a Sept. 22 letter.

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

Square Inc., logo seen above, proposed officially allowing companies to classify the cryptocurrency assets as inventory if they plan to resell them.


andrew kelly/Reuters

U.S. regulators in recent months have made new efforts against climate change a priority. Securities and Exchange Commission Chairman

Gary Gensler

has asked his staff to write a rule proposal by the end of the year that would force businesses to disclose climate-related risks.

Companies also are pushing for definitive rules around accounting for bitcoin and other cryptocurrency assets, which have drawn regulators’ interest after sharp swings in digital currency in recent months. Most finance chiefs so far have avoided investing corporate cash into crypto assets over concerns about its market volatility.

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

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

“We feel it is important that the economic substance of bitcoin transactions be reflected in the accounting model and per discussions with our stakeholders, that is currently not being accomplished,” Ajmere Dale, Square’s chief accounting officer, wrote Sept. 22.

Write to Mark Maurer at [email protected]

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Jinggo B Danuarta

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