SAB 74 Disclosure Requirements for Upcoming Accounting Standards: 2026 Execution Guide
If you are preparing a Q2 2026 Form 10-Q or planning your year-end 2026 annual report, your "recently issued accounting standards not yet adopted" footnote is under more scrutiny than it has been in years. The pipeline of ASUs requiring SAB 74 treatment is unusually large right now, and SEC comment letter staff have been explicit: boilerplate language will draw a comment.
This guide goes beyond what SAB 74 says. It tells you exactly what to write, which ASUs are in scope today, how the disclosure obligation escalates as effective dates approach, and what the SEC's own comment letters reveal about where companies go wrong.
Key takeaway: SAB 74 (codified as SAB Topic 11.M and at ASC 250-10-S99-6) requires public companies to disclose the potential effects of every issued-but-not-yet-adopted accounting standard in every interim and annual SEC filing. The obligation applies whenever the effect is expected to be material, and it covers recognition, measurement, presentation, AND note disclosures.
What SAB 74 Actually Requires: The 5 Elements
A compliant SAB 74 disclosure must include five specific elements. These are not suggestions; they are what SEC staff check against when reviewing your filing. Per Deloitte's SEC Comment Letter Considerations roadmap, the required elements are:
- A brief description of the standard and what it changes.
- The required adoption date and the company's planned adoption date if earlier.
- The permitted transition methods and the method the company expects to use (or a statement that the method has not yet been determined).
- A discussion of the expected effect on the financial statements, or a statement that the effect is not known or reasonably estimable.
- Disclosure of other significant matters expected to result from adoption, such as potential debt covenant violations or planned changes in business practices.
When you cannot yet quantify the impact, the disclosure does not simply say "not yet determinable" and stop there. KPMG's January 2024 Hot Topic on SAB 74 confirms that the SEC staff expects three additional qualitative elements in that scenario:
- A comparison of your current accounting policies to the policies you expect to apply under the new standard.
- The status of your implementation process.
- The significant implementation matters that have not yet been addressed.
Partial quantification is explicitly encouraged. If you can estimate the impact on one portfolio, one asset class, or one line item, disclose it even if the full financial-statement impact is not yet estimable. The SEC staff's position, as summarized by KPMG: "if the quantitative impact of the adoption of a new accounting standard is known or reasonably estimable, that information should be disclosed, even if the impact of adoption on the financial statements as a whole is not yet reasonably estimable."
The Progressive Disclosure Ratchet: What to Say Quarter by Quarter
The single most common SAB 74 deficiency is static language. The SEC staff, reiterating its position at the 2023 AICPA & CIMA Conference on Current SEC and PCAOB Developments, has stated that SAB 74 disclosures must become "increasingly more informative as the effective date of a new standard approaches." Copying last quarter's footnote verbatim is not compliance.
Here is how the ratchet works in practice for a standard with a January 1, 2028 effective date (roughly eight quarters from mid-2026):
| Distance from Effective Date | What the Disclosure Must Contain |
|---|---|
| 6-8 quarters out | Standard description, effective date, transition method options, statement that impact is being evaluated, qualitative description of what will change |
| 4-5 quarters out | All of the above, plus: expected transition method, comparison of current vs. expected accounting policies, implementation status update, identification of significant open matters |
| 2-3 quarters out | All of the above, plus: quantitative estimates for any reasonably estimable portions, updated implementation status, ICFR changes underway |
| 1 quarter out | Full quantitative disclosure to the extent estimable, transition method confirmed, ICFR controls in place, any remaining uncertainties specifically identified |
The practical implication: your disclosure for ASU 2024-03 (disaggregated expenses, effective fiscal year 2027 for calendar-year companies) should look materially different in your Q2 2026 filing than it did in your 2025 annual report. If it does not, you are a comment letter candidate.
Which ASUs Require SAB 74 Disclosure in Your 2026 Filings
As of mid-2026, the following ASUs are the most likely to require active SAB 74 treatment in your Q2 2026 10-Q and your 2026 annual report. Per BDO's tracker of new accounting standards, standards issued after a publication date must also be considered even if they postdate your filing preparation.
| ASU | Topic | Mandatory Effective Date (Calendar-Year Public Companies) | SAB 74 Scope Notes |
|---|---|---|---|
| ASU 2023-09 | Income Tax Disclosures (ASC 740) | Annual periods beginning after Dec 15, 2024 (i.e., fiscal year 2025) | If adopted on schedule, SAB 74 obligation has ended; companies that deferred still need disclosure |
| ASU 2024-03 | Disaggregated Income Statement Expenses | Annual periods beginning after Dec 15, 2026 (fiscal year 2027) | Active SAB 74 disclosure required in all 2025, 2026, and 2027 interim filings |
| ASU 2025-10 | Government Grants (new US GAAP model) | TBD per ASU | SAB 74 disclosure required from issuance through adoption; see Finrep's ASU 2025-10 guide |
| ASU 2026-02 | Carbon Credits / ASC Topic 818 | TBD per ASU | Issued May 2026; SAB 74 disclosure required immediately in subsequent filings; see Finrep's ASU 2026-02 guide |
| Any ASU issued in 2025-2026 with future effective dates | Various | Per each ASU | Must be assessed for materiality and included if material |
For ASU 2023-09, most calendar-year public companies adopted in their 2025 annual filings. If your company adopted on schedule, the SAB 74 obligation for that standard has ended and ASC 250 transition disclosures now govern. If your company deferred (where permitted), the SAB 74 obligation continues.
For ASU 2024-03, the clock is running. This standard requires disaggregation of income statement expenses into specific categories and is effective for annual periods beginning after December 15, 2026. That means SAB 74 disclosures are required in every filing from now through adoption, covering all of 2026 and 2027 interim filings for calendar-year companies.
For ASU 2026-02 (carbon credits, establishing ASC Topic 818), the standard was issued in May 2026. Any filing prepared after issuance must assess whether the standard's effect is material and, if so, include SAB 74 disclosure. For companies that hold or transact in environmental credits, this is not a close call. Finrep's ASC 818 vs. IFRS comparison covers the recognition and measurement changes in detail.
Disclosure-Only Standards Are Fully in Scope
A standard that does not change recognition or measurement can still require SAB 74 disclosure. This is one of the most common misconceptions among preparers, and it is wrong.
SAB Topic 11.M applies to any standard that will have a material effect on the financial statements "including on the accompanying notes." KPMG confirms that ASU 2023-07 (segment reporting) and ASU 2023-09 (income tax disclosures) both required SAB 74 treatment precisely because they add significant new note disclosure requirements, even though neither changes how amounts are recognized or measured on the face of the statements.
As BDO notes: "A new accounting standard may not be expected to materially affect the primary financial statements; however, it may require new significant disclosures that require significant judgments."
The materiality assessment must therefore cover all four dimensions: recognition, measurement, presentation, and disclosure. Run that full assessment before concluding a standard is out of scope.
One important boundary: SAB 74 does not require you to provide the complete disclosure that would be required under a fully effective standard. That would constitute early adoption. The obligation is to disclose the upcoming change and its expected effects, not to implement it.
The Comment Letter Traps: What the SEC Actually Flags
SEC staff comment letters on SAB 74 follow predictable patterns. Understanding them is the fastest way to avoid them.
The Public Statement Trap
This is the enforcement risk that almost no SAB 74 article addresses. The SEC staff monitors public statements by management, including earnings calls and investor conferences, and uses them as evidence that quantitative information is "known or reasonably estimable."
The CECL example from Deloitte's SEC Comment Letter Considerations roadmap is instructive. The SEC staff wrote:
"We note the disclosures . . . relating to the impact of CECL and the discussion of the quantitative build to the allowance disclosed by your CFO at the conference . . . but were unable to locate this information in your Form 10-K . . . . Please revise to include this information in future filings . . ., consistent with SAB Topic 11:M."
The implication is direct: if your CFO quantifies an adoption impact at an investor day or on an earnings call, that number belongs in your next SEC filing. Prepare your IR and finance teams accordingly.
The "Not Yet Determinable" Dead End
The second most common comment trigger is a bare "not yet determinable" statement with no accompanying qualitative detail. The ASC 842 (leases) comment letter example from the same Deloitte source shows exactly what the SEC staff demands when quantification is not yet possible:
"If you cannot reasonably estimate the impact of adoption, please revise to provide more specific qualitative disclosures of the potential impact that this standard will have on your financial statements when adopted. Also describe the status of your process to implement the new standard and the significant implementation matters yet to be addressed. Refer to ASC 250-10-S99-6 and SAB Topic 11.M."
The fix is straightforward: pair every "not yet estimable" statement with a policy comparison, an implementation status update, and a list of open matters.
Other Common Comment Triggers
- Omitting the transition method (or failing to update it once determined).
- Failing to update disclosures as the effective date approaches (static language across quarters).
- Omitting implementation status entirely.
- Failing to address the effect on note disclosures for disclosure-only standards.
The ICFR Dimension Most Companies Miss
SAB 74 has an internal controls dimension that is almost entirely absent from published guidance and SERP results. It is a real compliance obligation.
The CAQ Alert 2017-03, summarized by BDO, is explicit: registrants, audit committees, and auditors should discuss the status of implementation of new accounting standards, including changes in internal control over financial reporting (ICFR). The responsibilities break down as follows:
- Management: Determine whether appropriate internal controls are in place to ensure SAB 74 disclosures are accurate and complete. When a new standard changes processes, data collection, or systems, those ICFR changes must be identified and disclosed.
- Audit Committee: Set the appropriate tone, establish oversight and review processes, and confirm that adequate SAB 74 disclosure controls are in place and operating effectively.
- Auditors: Obtain sufficient understanding of the implementation status and assess whether ICFR changes related to new standard adoption are appropriately reflected in management's disclosures.
For a standard like ASU 2024-03 (disaggregated expenses), which will require companies to capture and report expense data at a more granular level than current systems may support, the ICFR implications are material. Your SAB 74 disclosure should address whether system changes are planned and where the implementation stands.
This also connects to your SOX 302 and 906 certifications. If your SAB 74 disclosures are inaccurate or incomplete, that is a disclosure controls failure, not just a footnote deficiency.
Edge Cases: Early Adoption, Late-Issued ASUs, and Immateriality
Early Adoption
Once you adopt a standard, the SAB 74 obligation for that standard ends. ASC 250-10-50 transition disclosures then govern. If you are considering early adoption, your SAB 74 disclosure in the filing before adoption should confirm the planned early adoption date and the transition method you will use.
ASUs Issued Close to a Filing Date
An ASU issued in May 2026 must be considered in a June 30, 2026 Form 10-Q even if the standard postdates the start of your filing preparation. BDO confirms that "standards issued after this publication's date . . . are unlikely to affect first-quarter financial statements, but entities must consider them in preparing SAB 74 disclosures." Build a step into your close calendar to check the FASB's issued ASU list before finalizing the footnote.
Immateriality
If you conclude a standard will not have a material effect, a statement to that effect satisfies SAB 74. Document the materiality assessment. The assessment must cover recognition, measurement, presentation, and disclosure, not just the income statement impact. A standard with no P&L effect but significant new note disclosure requirements can still be material.
SAB 74 vs. ASC 250-10-50: Which Governs?
SAB 74 is SEC staff guidance and applies only to public companies subject to the Securities Exchange Act of 1934. ASC 250-10-50 is a GAAP requirement that applies to all entities and governs disclosures once a standard has been adopted (i.e., the change-in-accounting-principle disclosures). The two requirements operate in sequence: SAB 74 governs the pre-adoption disclosure period; ASC 250-10-50 governs the adoption-period disclosures. Private companies have no SAB 74 obligation, though the CAQ Alert notes the content may be helpful guidance for them.
SAB 74 and MD&A: When the Footnote Is Not Enough
SAB 74 disclosures live in the notes to the financial statements, but the SEC's Regulation S-K Item 303 (MD&A) creates a parallel obligation. When an upcoming accounting standard is expected to have a material effect on the company's results of operations, liquidity, or capital resources, that effect should also appear in MD&A, not just the notes.
For a standard like ASU 2024-03, which will change how operating expenses are presented and disclosed, a company with significant cost complexity should consider whether MD&A needs to flag the upcoming change and its expected effect on how investors will read the income statement. Cross-referencing the footnote from MD&A is acceptable; omitting the topic from MD&A entirely when the effect is material is not.
FAQ
Does SAB 74 apply to disclosure-only standards like ASU 2023-09? Yes. SAB 74 covers any standard that will have a material effect on the financial statements, including the notes. ASU 2023-09 (income tax disclosures) and ASU 2023-07 (segment reporting) both required SAB 74 treatment because of their significant new note disclosure requirements, even though neither changes recognition or measurement.
What if I genuinely cannot estimate the financial impact yet? You cannot simply say "not yet determinable." You must also disclose: (a) a comparison of your current accounting policies to the policies you expect to apply, (b) the status of your implementation process, and (c) the significant implementation matters not yet addressed. Partial quantification, where any portion of the impact is estimable, should also be included.
When does the SAB 74 obligation end for a given standard? The obligation ends when you adopt the standard. At that point, ASC 250-10-50 transition disclosures govern. If you early adopt, the SAB 74 obligation ends at the early adoption date.
Can my CFO discuss adoption impacts publicly without including them in the filing? No. The SEC staff treats public statements by management as evidence that quantitative information is "known or reasonably estimable." If your CFO quantifies an adoption impact at an investor conference or on an earnings call, that information must appear in your next SEC filing.
Does SAB 74 apply to private companies? No. SAB 74 is SEC staff guidance and applies only to public companies subject to the Securities Exchange Act of 1934. Private companies have no SAB 74 obligation, though the underlying disclosure principles are considered good practice.
What is the difference between SAB 74 and SAB Topic 11.M? They are the same thing. SAB 74 was the original bulletin number when issued in 1987. It was later codified in the SEC's SAB codification as Topic 11.M and at ASC 250-10-S99-6. All three references point to the same requirement.
For the specific accounting changes that will drive your 2026 SAB 74 disclosures, Finrep's deep dives on ASU 2025-10 government grants and ASU 2026-02 carbon credits give you the technical detail you need to write disclosures that go beyond boilerplate.
