FASB Proposes Standards Delay

At their meeting on July 17, the Financial Accounting Standards Board (FASB) voted to propose an implementation delay on four key standards.

Proposed Delays

Earlier this year, both the AICPA’s Technical Issues Committee and the Associated General Contractors of America sent letters to FASB requesting the delay. Though most companies expect that it would be possible to get the accounting correct, the delay will allow them to adhere to the updates more thoroughly and efficiently.

The FASB’s proposed delays are as follows:

  1. Lease Accounting – Already in effect for public companies, the FASB proposal would delay the effective date for private companies to January 2021.
  2. Accounting for Credit Losses – This is currently set to take effect in January 2020 for SEC filers and January 2023 for small reporting companies. The FASB proposed to push effective dates back to January 2023 for public business entities, private companies, and nonprofits.
  3. Derivates and Hedging – Already in effect for public companies, the FASB proposal would delay the effective date for private companies to January 2021.
  4. Long-Duration Insurance Contract – This is currently set to take effect in January 2021 for SEC filers and January 2024 for small reporting companies. The FASB proposed to push the effective date for SEC filers to January 2022 and the date for other public business entities, private companies, and nonprofits to January 2024.

Impact on Taxpayers

The FASB is hopeful that these delays will allow companies the space they need to get the accounting correct and improve both their processes and business approach. For example, adhering to the new lease accounting standards requires substantial work to locate and gather lease contracts and then extract the necessary data. The later effective date is intended to ease the burden of this process.