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FASB Votes to Delay Effective Dates of Four New Accounting Standards

10.18.2019

On Wednesday, Oct. 16, the Financial Accounting Standards Board (FASB) voted to approve the proposals to delay the effective dates of the new leases, credit losses, hedging and long-duration insurance contract standards for one year for smaller reporting companies[1], private companies and not-for-profit entities. The FASB originally proposed the deferral of these standards in July.

There will be what FASB refers to as a "two-bucket approach,” which gives smaller reporting companies and private companies more time to learn from larger companies about how to implement the standards. See below for updates to the effective dates for public, small reporting and private companies, as well as nonprofits:

Leases – ASU 2016-02, Leases

Business segment

Previous Effective Date

New Effective Date

SEC filers and public business entities

Effective since January 2019

-

Private companies and nonprofits

January 2020

January 2021

Credit losses (CECL) – ASU 2016-13, Financial Instruments – Credit Losses (Topic 326)

Business segment

Previous Effective Date

New Effective Date

SEC filers (excluding smaller reporting entities)

January 2020

No change

Other public business entities (including smaller reporting companies)

January 2021

January 2023

Private companies and nonprofits

January 2021

January 2023

Hedge accounting – ASU 2017-12, Derivatives and Hedging (Topic 815)

Business segment

Previous Effective Date

New Effective Date

SEC filers and public business entities

Effective since January 2019

-

Private companies and nonprofits

January 2020

January 2021

Long-duration insurance contracts – ASU 2018-12, Financial Services – Insurance (Topic 944)

Business segment

Previous Effective Date

New Effective Date

SEC filers (excluding smaller reporting companies)

January 2021

January 2022

Other public business entities (including smaller reporting companies)

January 2021

January 2024

Private companies and nonprofits

January 2022

January 2024

The FASB plans to issue a final accounting standards update including these decisions in mid-November.

With the effective dates officially moving back for each of these new standards, there are now additional planning opportunities for your business that extend beyond compliance and more time to deal with the complexities of the transition. From choosing and employing software solutions to future planning, there are many advantages to early preparation for your organization’s ultimate implementation. Additional time to implement more thoroughly also offers the opportunity to adequately assess your environment and consider making process and business improvements.

To evaluate the impact of the new accounting standards for your businesses and for assistance in setting up processes and systems to implement and adhere to the changes, please contact Audit Partner Lincoln Gray at lgray@bswllc.com or 314.983.1235, or Audit Principal Dan Ward at dward@bswllc.com or 314.983.1237.

[1] Small reporting companies are defined as those with a public float of less than $250 million or annual revenue of less than $100 million and either no public float or a public float of less than $700 million.

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