By Colin M. Hannifin, CPA, Business Assurance & Advisory Services Senior Manager
By Colin Hannifin, Business Assurance & Advisory Services Manager
Update: On Wednesday, June 3, 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2020-05, which granted a one-year delay on the required implementation dates of the new lease and revenue recognition standards for certain entities.
Proposal to delay implementation of three significant new accounting standards
In their July meeting, the Financial Accounting Standards Board (FASB) indicated that it was considering proposing delaying the implementation of four significant new accounting standards for certain non-public entities.
On August 15, the FASB formalized those plans, issuing an exposure draft of a proposed Accounting Standards Update (ASU) which would delay the implementation of the following standards:
- Accounting for Leases
For non-public business entities with calendar year-ends, this standard will be effective in January 2021.
- Accounting for Derivatives and Hedging
For non-public entities with calendar year-ends, this standard will be effective in January 2021.
- Accounting for Credit Losses
For non-public entities and smaller reporting companies (as defined by the SEC) with calendar year-ends, this standard will be effective in January 2023.
The FASB had also indicated in July that it was considering a proposal to delay the implementation of an ASU regarding long-duration insurance contracts. This was not included in the August 15 exposure draft but will be addressed in a separate project.
The exposure draft is a response to requests and concerns voiced by the AICPA and private companies that the efforts required to implement these significant new standards are overwhelming accounting department resources. The intent is to allow the impacted entities more time to become educated about the new standards and adapt their business practices accordingly. This reflects a change in FASB’s philosophy regarding the implementation of major new standards.
The exposure draft is available for review and comment. The deadline to submit comments to the FASB regarding the proposed ASU is September 16, 2019. After the comments are received, the FASB is expected to review and finalize the new ASU.
Keiter will keep you up to date about the status of this proposal and FASB’s ultimate decision.
Additional Lease Accounting Resources
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.