ARTICLE
29 April 2025

Comment Letter On The Proposed Accounting Standards Update For Environmental Credit Programs

R
Riveron

Contributor

Founded in 2006, Riveron professionals simplify and solve complex business problems. We partner with CFOs, private equity firms, and other stakeholders to maximize outcomes.

Riveron teams bring industry perspective and a full suite of solutions focused on the office of the CFO, M&A, and distress.

In 2023, the company was acquired by affiliates of Kohlberg & Company from H.I.G. Capital – which is continuing its partnership with Riveron through a minority investment. Riveron has 18 global offices.

Making recommendations on behalf of the office of the CFO, Riveron's technical accounting advisors comment on an accounting standards update (ASU Topic 818) proposed by the FASB.
United States Accounting and Audit

Making recommendations on behalf of the office of the CFO, Riveron's technical accounting advisors comment on an accounting standards update (ASU Topic 818) proposed by the FASB.

Riveron Comments on Proposed ASU – Environmental Credits and Environmental Credit Obligations (Topic 818)

In April 2025, Riveron submitted comments to the Financial Accounting Standards Board (FASB) on its Exposure Draft for Topic 818.

While supportive of the Board's objective to develop a comprehensive framework related to accounting for environmental credits and related obligations, our team provided targeted feedback highlighting areas for potential improvement and clarification.

For further perspective on this proposed accounting standard update and what it could mean for your organization, please contact our technical accounting experts Brian Allen, Patrick Garrett, or Lara Long.

Explore the relevant details in Riveron's comment letter, or read the key points summarized below:

1616762a.jpg

View the Comment Letter

Riveron supports the FASB's efforts to bring consistency and transparency to the accounting for environmental credits and environmental credit obligations. We found that provisions such as the definition of an environmental credit and the differentiation between compliance and noncompliance credits held or generated by entities to be clear and operable. However, there are a handful of provisions for which we have encouraged the Board to further consider the provisions of the proposed standard. These items included our belief that all environmental credits should be capitalized and then subjected to an impairment model. We also objected to the optional use of fair value for measurement of noncompliance environmental credits when they are generated as an output in the ordinary course of business. In addition, we expressed concern that the approach used to account for environmental credit obligations could introduce volatility into the balance sheet and income statement that is not decision-useful to investors. Please find our detailed comments in our letter on Riveron's website or at FASB.org.

About the comment letter process

Riveron (including the recently acquired Effectus Group) regularly submits comment letters to the FASB on various amendments to Generally Accepted Accounting Principles (GAAP) proposed by the Board. The FASB's comment process is designed to ensure transparency and inclusivity in the standard-setting process. Riveron's technical accounting team is a proud stakeholder in this process, monitoring all proposed changes and amendments on behalf of its clients. The FASB relies on the input of advisory professionals who are familiar with the day-to-day accounting challenges and opportunities faced by CFOs and accounting leaders.

After thoroughly reviewing comments and making any necessary revisions, the FASB may issue the final accounting standards updates. These final standards are published in the FASB Accounting Standards Codification (ASC), which provides the official text for GAAP. The final standards will also include a detailed explanation of the changes and their effective dates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More