FASB Proposes Delay on 4 Major Accounting Changes
What’s Going On
The Financial Accounting Standards Board (“FASB”) recently voted on a proposal to delay the effective dates for four significant standards related to accounting for leases, credit losses, derivatives and hedging, and long-duration insurance contracts. The proposal is FASB’s response, largely to the private company world, to offset the burden of implementing these major standards.
FASB’s proposed plans include the following changes:
- Lease accounting: The new effective date for calendar-year-end preparers that are not public business entities would be Jan. 1, 2021. The effective date for calendar-year-end public business entities, employee benefit plans, and not-for-profit conduit bond obligors is Jan. 1, 2019, and would remain unchanged.
- Accounting for credit losses: The effective date for calendar-year-end SEC filers, excluding smaller reporting companies as defined by the SEC, would remain Jan. 1, 2020. The new effective date for all other calendar-year-end entities would be Jan. 1, 2023. This change would extend the effective date for smaller reporting companies, private companies, and other non-SEC filers.
- Derivatives and hedging: The effective date for calendar-year-end public business entities is Jan. 1, 2019, and would remain unchanged. The new effective date for calendar-year-end preparers that are not public business entities would be Jan. 1, 2021, an extension of one year.
- Long-duration insurance contracts: The new effective dates would be Jan. 1, 2022, for calendar-year-end public business entities and Jan. 1, 2024 for all other entities with a calendar year-end.
The proposal must still pass through a 30-day timeline of public review of an exposure draft next month. We anticipate favorable acceptance for this proposal and suggest that companies begin considering the effects that the change in effective dates for these standards will have on their implementation efforts. FASB reminds all affected companies that early adoption is still permitted for the effected standards as with the original timeline prior to the proposal.
We will keep you posted on further movements in this proposal as appropriate.
James E. Merklin?>
CPA/CFF, CFE, CGMA, MAcc
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