US standard setter consults on delay to lease accounting standard
16 Aug 2019
The US Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) that would grant private companies, not-for-profit organisations, and certain small public companies additional time to implement the new standard on leases, current expected credit losses (CECL) and hedging
16 Aug 2019
The leases and hedging rules will now come into force from January 2021, with changes to accounting for CECL due from January 2023, subject to consultation.
The proposed ASU describes a new FASB philosophy that extends and simplifies how effective dates for major standards are staggered between larger public companies and all other entities. Those other entities include private companies, smaller public companies, not-for-profits, and employee benefit plans.
Under this approach, a major standard would first be effective for larger public companies. For all other entities, FASB would consider requiring an effective date staggered at least two years later. Generally, it is expected that early application would continue to be permitted for all entities.
‘Based on what we’ve learned from our stakeholders, including the Private Company Council and the Small Business Advisory Committee, private companies, not-for-profit organizations, and some small public companies would benefit from additional time to apply major standards,’ stated FASB chairman Russell G Golden. ‘This represents an important shift in the FASB’s philosophy around effective dates, one we believe will support better overall implementation of these standards.’
The FASB Proposed accounting standards update—financial instruments—credit losses (Topic 326), derivatives and hedging (Topic 815), and leases (Topic 842): effective dates proposed ASU and a FASB In Focus overview document are available at www.fasb.org.
The consultation closes for comment on 16 September 2019.