Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

SEC Chief Accountant Wesley R. Bricker recently gave remarks at the AICPA National Conference on Banks & Savings Institutions. Mr. Bricker spoke to the adoption of FASB’s new credit loss standard and related implementation matters. He also addressed new PCAOB standards and stated that the SEC was reviewing comments on the new auditor reporting standard and that “the Commission must take action by October 26.”

Mr. Bricker also gave his thoughts on financial reporting requirements for registered initial coin offerings, which are sometimes referred to as ICOs or token sales. I assume he did so not solely because he finds the topic intellectually interesting, but that the SEC is fielding questions on how actually to go about registering an ICO in the wake of the SEC’s investigative report on The DAO.

According to Mr. Bricker:

“An organization should consider applicable accounting and reporting guidance, for example in U.S. GAAP, when preparing financial statements.

The guidance addresses relevant considerations, including, for example, those regarding presentation and disclosure of financial statements, consolidation, translation, assets, liabilities, revenue, expenses, and ownership. In this regard, issuers and holders should consider, for example, the application of the guidance in addressing questions such as:


  • What are the necessary financial statement filing requirements?
  • Are there liabilities requiring recognition or disclosure?
  • Are there previously recognized assets that require de-recognition?
  • Are there revenues or expenses requiring recognition or deferral?
  • Is there a transaction with owners, resulting in debt or equity classification and possibly compensation expense?
  • Are there implications for the provision for income taxes?


  • Does specialized accounting guidance (such as for investment companies) apply to the holder’s financial statement presentation?
  • What are the characteristics of the coin or token in considering whether, how, and at what value the transaction should affect the holder’s financial statements?
  • What is the nature of the holder’s involvement in considering whether the issuer’s activities should be consolidated or accounted for under the equity method?

Again, these are intended only to be illustrative questions. An entity involved in initial coin or token offering activities will need to consider the necessary accounting, disclosure and reporting guidance based on the nature of its involvement.”