Day two of the AICPA Conference focused squarely on how the profession must respond to an environment defined by regulatory acceleration, rising disclosure expectations, rapid technological disruption, and heightened investor scrutiny. Across sessions from tax reform and CorpFin updates to PCAOB oversight, audit committee priorities, and the future of accounting education, the message was consistent: change is no longer episodic: it is continuous, interconnected, and increasingly urgent.

Beyond 2025: Navigating the Evolving Tax Regulatory Landscape

This session highlighted how quickly the tax landscape is evolving and how deeply these changes now intersect with financial reporting. Panelists emphasized that legislative uncertainty, global minimum tax rules, and new disclosure requirements are making tax a far more visible component of company performance, demanding closer collaboration across tax, controllership, FP&A, legal, and investor relations.

Key themes:

  • Pillar 2 Readiness: Companies must model and disclose impacts based on enacted laws, even where guidance is incomplete. Jurisdictional variations, different filing currencies, and early reporting requirements add operational complexity.
  • Public country by Country Reporting: Once confidential, country-by-country reporting will now be public information, heightening reputational, competitive, and interpretive risks. Ensuring alignment across statutory reporting, tax footnotes, and investor messaging will be critical.
  • ASU 2023-09, Improvements to Income Tax Disclosures, implementation: Data availability, mapping, and control challenges are proving more significant than expected, especially where cash taxes are tracked outside the provision system. Many companies are weighing retrospective adoption to preserve comparability.

Overall, the panel reinforced that tax can no longer operate in a silo. As tax rules become more intertwined with accounting and disclosure, companies need coordinated processes, consistent narratives, and stronger data governance to navigate 2025’s rapidly changing environment.

Developments in the Division of Corporation Finance

The SEC’s Division of Corporation Finance provided one of the most substantive technical updates of the day, outlining progress on clearing the unprecedented filing backlog, highlighting upcoming rulemaking, and sharing detailed observations on segments, non-GAAP measures, financial statement presentation, and transaction reporting. The tone was practical and transparent: the volume is high, the rules are evolving quickly, and registrants should prepare for increased precision in disclosures.

Division Priorities, Backlog, and Rulemaking Pipeline

New CorpFin Director Jim Maloney opened with a candid assessment of the post-shutdown backlog: more than 1,000 registration statements, with teams working “long hours” and prioritizing capital-raising and IPO filings. Secondary and resale filings will move more slowly, and registrants were urged to allow examiners breathing room.

Maloney also previewed an accelerated rulemaking agenda, emphasizing that proposals “will come fast” in 2025, covering topics such as executive compensation, semiannual reporting, crypto, and other areas likely to draw strong public comment. He encouraged registrants to stay engaged and submit feedback early.

FRM Modernization and Staff Turnover

CorpFin’s Chief Accountant Heather Rosenberger highlighted key accomplishments of the group, which included:

  • Three major updates to the Financial Reporting Manual (FRM) (June, August, December), bringing rules fully current.
  • Incorporation of long-standing staff views and clarity improvements.
  • A new FRM roadmap summarizing all updated sections.

Segment Reporting — Early Implementation Observations

The panel shared practical observations on ASU 2023-07 that registrants should address now:

Determining the required CODM measure

  • If multiple measures are used, the measure closest to GAAP (i.e., with more GAAP-consistent inclusions) must be disclosed.
  • GAAP-basis measures outrank non-GAAP measures; e.g., operating income > gross profit > EBITDA > adjusted EBITDA.
  • When no CODM measure aligns with GAAP, registrants must apply judgment and document why the chosen measure is “closest.”

Common deficiencies noted

  • Missing or incomplete explanations of how the CODM uses each reported measure.
  • Failure to explain why no “significant segment expenses” exist when none are disclosed.
  • Use of subtotal formats that inadvertently create non-GAAP measures (e.g., pseudo-consolidations, subtotal groupings of only some segments).
  • Naming conventions too similar to income-statement captions, confusing GAAP and non-GAAP amounts.

Non-GAAP Measures — Why Comments Keep Coming

The staff reiterated a core theme: management’s internal use does not justify a misleading non-GAAP measure. Key reminders:

  • Disclosure popularity (“investors expect it”) is not a defense.
  • Measures objected to by the staff must generally be removed immediately, unless timing constraints (e.g., imminent earnings releases) require a short transition.
  • Companies unclear on why a measure is misleading are encouraged to call the review team directly.

Financial Statement Presentation Hot Spots

Expect more comments in this area. Staff reminders included:

  • Cash flow statements must present material items separately (e.g., receivables, inventory, payables) and avoid netting dissimilar items.
  • Related-party balances must appear on the face of the statements for non-S-X Article 12 filers.
  • For software companies, license revenue (when a separate ASC 606 performance obligation) should typically be presented as product revenue, not combined with services or SaaS.

Revenue Issues: Incentive Structures

For platforms and technology companies offering end-user incentives:

  • Determining whether incentives reduce revenue or represent marketing expense often hinges on who the “customer” is and whether suppliers have valid expectations of payment.
  • Material incentives recorded as marketing expense should still be quantified and discussed in MD&A due to their impact on operating results.

Transaction Reporting: Predecessors, Spins, and Put-Togethers

The staff described continued complexity in:

  • Predecessor identification, particularly in spin-offs, put-together transactions, and licensing arrangements (e.g., biotech in-license agreements).
  • Situations where abbreviated financial statements may be acceptable.
  • Rules governing forward versus reverse spins and when separate or combined financial statements are required.
  • Common-control reorganizations, including newly added FRM guidance allowing consolidated statements in certain pre-IPO restructurings.

Audit Quality Now and in the Future: A PCAOB Panel Discussion

The PCAOB provided a forward-looking update on audit quality, highlighting encouraging declines in Part 1.A inspection report findings across both large and smaller firms. Board members attributed the improvement to stronger risk assessment procedures, greater use of specialists, enhanced consultation processes, and more robust client acceptance and pre-issuance review controls. While the results are positive, the PCAOB stressed that sustaining audit quality will require continued discipline as firms face rapid technological and organizational change.

The Board also addressed the one-year delay of QC 1000, emphasizing that the extension is meant to support implementation and not to signal reduced expectations. Firms were encouraged to continue building and refining their quality-control systems during the transition period.

Several emerging risks were cited, including overreliance on AI, potential weakening of professional skepticism, and the effects of private-equity ownership models on independence and long-term audit quality. The PCAOB reinforced its ongoing enforcement priorities (significant audit failures, independence breaches, ethics violations, and repeated QC deficiencies) and reminded firms that these areas will remain central in future inspection cycles.

Inside the Audit Committee: What’s Really on the Agenda

This panel offered a practical view of how audit committees are navigating a fast-changing risk landscape. Members emphasized the growing expectations placed on audit committees and the importance of strong governance structures, particularly clear reporting lines, direct access to risk and internal audit leaders, and a capable internal audit function that can support both risk identification and major operational changes.

Emerging risks dominated the discussion. Audit committees are dealing with expanding areas of oversight, including geopolitical and regulatory shifts, operational pressures, and the increasing complexity of financial reporting. AI was a central theme: panelists stressed the need for disciplined data governance, realistic public messaging, and early-stage oversight of AI experimentation, noting that many companies are still in the foundational stages of adoption.

Cyber risk continues to escalate, especially as AI increases attack sophistication. Panelists described frequent phishing attempts targeted at board members themselves, underscoring the need for continuous vigilance. ESG disclosure expectations are evolving, but most boards are converging toward a balanced approach: neither abandoning disclosures nor overstating commitments. Panelists closed by underscoring year-end priorities: avoid surprises, ensure internal audit is properly resourced, and align AI and ESG disclosures to what the company can actually support.

Degrees, Data, and Disruption: The New Reality for Accounting Education

This session highlighted how AI is accelerating a fundamental shift in accounting education and the profession’s long-term talent model. Universities are already facing pressure from declining enrollments, fewer CPA candidates, shrinking budgets, and reduced international student populations, which are challenges now compounded by AI’s rapid ability to perform tasks traditionally taught through years of coursework.

AI is increasingly outperforming students in areas like diagnostic reasoning, fraud brainstorming, and even CPA exam-style questions, prompting educators to rethink what and how they teach. The focus must shift from memorization to judgment, problem-solving, and the ability to work effectively with AI tools.

Rather than displacing accountants, AI offers opportunities to transform learning through personalized tutoring, automated practice environments, and simulations that accelerate skill development. The takeaway: AI’s emergence gives the profession a chance to redefine its identity. By shifting learning toward judgment, strategic thinking, and curiosity (supported by AI rather than replaced by it), accounting can attract new talent and strengthen its relevance in a rapidly evolving marketplace.