FASB (Financial Accounting Standards Board) will delay effective dates for four key standards for some groups of Financial Statement preparers. The affected groups include accounting companies for
Lease Accounting: preparers not public business entities’ new date would be January 1, 2021. Year end public businesses, employee benefit plans and non-profit conduit bond obligors remains unchanged, or January 1, 2019.
Credit Losses Accounting: There are different effective dates based on filers: SEC filers, except smaller reporting companies, remains January 1, 2020; all other calendar year end entities would be January 1, 2023. Smaller reporting companies, private companies and other non-SEC filers will be extended.
Derivatives and Hedging: Public business entities effective date remains unchanged, while smaller private entities will receive a one year extension to January 1, 2021.
Long-Duration Insurance Contracts: Calendar year end public business entities new effective date will be January 1, 2022 while all other entities effective date will be January 1, 2024.
Several factors influenced the decision to delay implementation: availability of resources and the time needed to educate staff, as well as the opportunity to utilize feedback on implementation by large public company filers and SEC comment letters. Also affecting the delay was the need for difficult transition guidance; and the development of IT system solutions and expertise.
While some of the filers felt they would be able to meet the effective dates, those affected by the credit losses standard noted the complicated financial modeling that will pose challenges, especially to preparers in smaller firms. Concerns regarding changes in this standard drove the AICPA’s Technical Issues Committee (TIC), as well as the Associated General Contractors of America (AGCA) to send FASB requests for a delay of the change to the lease accounting standard effective date for private companies.