FASB Approves Delay for 3 Accounting Standards: Leases, Credit Losses, Hedging Dates Deferred

After a unanimous vote on Wednesday, the Financial Accounting Standards Board (FASB) approved proposals to delay the effective dates for three of its major accounting standards: leases, credit losses and hedging.

As we reported back in July, the FASB proposed to delay four of its standards largely in response to the private company world to offset the burden of implementing these major accounting standards, especially after revenue recognition standards took effect. There has been much anxiety around implementation across the private sector and deferral provides more time to assess the impact and fully implement.

According to the Journal of Accountancy website, this delay will change the effective dates for private companies and certain other entities as follows:

• SEC filers: The hedge accounting and lease accounting effective dates would remain for fiscal years beginning after Dec. 15, 2018, and the credit loss effective date would remain for fiscal years beginning after Dec. 15, 2019, except for smaller reporting companies, whose credit loss effective date would be extended to fiscal years beginning after Dec. 15, 2022.
• All other public business entities: The hedge accounting and lease accounting effective dates would remain for fiscal years beginning after Dec. 15, 2018, while the credit loss effective date would change from fiscal years beginning after Dec. 15, 2020, to fiscal years beginning after Dec. 15, 2022. The effective date of fiscal years beginning after Dec. 15, 2018, for lease accounting would also apply to employee benefit plans that file or furnish financial statements with or to the SEC as well as not-for-profit entities that have issued or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or over-the-counter market.
• Private companies and all others: The hedge accounting and lease accounting effective dates would be delayed one year to fiscal years beginning after Dec. 15, 2020. The credit loss effective date would be delayed two years to fiscal years beginning after Dec. 15, 2022.

Early-adoption options for the standards will remain unchanged.

No word yet on when the fourth standard in the original proposal, long-duration insurance contracts, will be voted on. We’ll keep you posted on the progress as it continues to move forward.