On October 16, 2019 the Financial Accounting Standards Board (FASB) approved a delay of effective dates for lease accounting, credit losses (CECL: Current Expected Credit Loss), hedge accounting and long-duration insurance contract standards. The update specifically affects private companies, nonprofits and small public companies and comes on the heels of concerns expressed by overwhelmed preparers.
FASB issued proposals for the delay in August and has requested its staff to draft an Accounting Standards Update (ASU) that will change the effective dates. A formal written ballot from the board is expected to be issued in mid-November. An article published by the Journal of Accountancy said that “one of the advantages of the delay is that it will allow preparers with limited resources to learn from the implementation performed by large public companies that possess more staffing and resources.”
The lease accounting and hedge accounting standards effective date change for private companies and nonprofits would now be January 2021, not January 2020 as originally planned. Public companies implemented the new hedging and leasing standards in January 2019.
The credit loss standard was set to go into effect in January 2021. SEC filers, excluding smaller reporting companies, were expected to implement the credit loss standard (CECL) in January 2020 while smaller reporting companies were given an implementation date of January 2021. Now, the proposed changed pushes these dates to January 2023 for SEC filers and smaller public companies, private companies and nonprofits.
The insurance contracts standard delay would move the effective dates for public companies, private companies and nonprofits. The new proposed date for SEC filers would go from January 2021 to January 2022. For other public, smaller reporting companies, the date change would go from January 2021 to January 2024. Private companies and nonprofits are expected to see a change in dates from January 2022 to January 2024.
A final accounting standards update is expected to come from FASB in mid-November. Smith & Howard’s Assurance Team will continue to communicate updates as they are announced. Should you have any questions related to the various FASB updates, please contact a member our Assurance Team by completing the contact form below or calling 404-874-6244.