US part delays credit loss and lease accounting standards

The US Financial Accounting Standards Board (FASB) plans to defer certain effective dates for upcoming accounting standards on current expected credit losses (CECL), leases, hedging and long-duration insurance contracts

It has issued two Accounting Standards Updates (ASUs) that finalise various effective date delays for the standards, affecting SEC filers, as well as public business entities (PBEs) and private companies in the US.

Based on calendar year end reporting, FASB has confirmed that the hedging rules under Topic 815 will be deferred for private and all non-listed companies until January 2021. SEC filers and PBEs have already adopted the standard effective 1 January 2019.

The lease rules – Topic 842 – will now be pushed back to January 2021 for private companies, while CECL and insurance contract accounting rule changes are also deferred to January 2023 and January 2024 respectively for private companies. Again these rules are already effective for the largest listed companies.

The CECL standard on credit losses – Topic 326 - will also be deferred to January 2023 for smaller reporting companies and private companies.

The new insurance standard, Topic 944, which will affect all insurance companies that issue long-duration contracts, such as life insurance and annuities, will be pushed back by a year to January 2022 for the largest listed filers, while the other groups will have to comply by January 2024.

The details are set out in ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842); and ASU No. 2019-09, Financial Services - Insurance (Topic 944).

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