FASB plans to propose delaying effective dates for four key standards — leases, credit losses, hedging, and long-duration insurance contracts — for certain groups of financial statement preparers to ease the burden on preparers.
FASB's proposal plans, to be published in exposure drafts, include changes for:
- Lease accounting: The new effective date for calendar-year-end preparers that are not public business entities would be Jan. 1, 2021.
- Accounting for credit losses: The effective date for calendar-year-end SEC filers, excluding smaller reporting companies as defined by the SEC, would remain Jan. 1, 2020. The new effective date for all other calendar-year-end entities would be Jan. 1, 2023.
- Derivatives and hedging: The effective date for calendar-year-end public business entities is Jan. 1, 2019, and would remain unchanged. The new effective date for calendar-year-end preparers that are not public business entities would be Jan. 1, 2021, an extension of one year.
- Long-duration insurance contracts: The new effective dates would be Jan. 1, 2022, for calendar-year-end public business entities and Jan. 1, 2024, for all other entities with a calendar year end.
FASB's staff cited numerous factors that led to the reconsideration of effective dates, including:
- Availability of resources.
- Time required to educate staff.
- Opportunity to learn from implementation issues described in large public company filings and SEC comment letters.
- Application of difficult transition guidance.
- Challenges in the development of IT system solutions, IT expertise, and effective business solutions and internal controls.
The board would leave early adoption options unchanged.
The concerns of preparers led the AICPA's Technical Issues Committee (TIC) to send FASB a letter in May requesting a delay in the lease accounting standard effective date for private companies. The Associated General Contractors of America sent a similar request.
Credit loss changes proposed: FASB proposed narrow-scope changes to its new standard for accounting for credit losses. The proposal would permit organizations to record negative allowances on assets that already had shown credit deterioration at the time of purchase (known as PCD assets). Comments on the proposal were due by July 29.
Goodwill changes considered: FASB is seeking comments on whether it should make changes to the accounting for certain identifiable intangible assets acquired in a business combination and subsequent accounting for goodwill. The deadline for responding to FASB's Invitation to Comment is Oct. 7.