FASB on Wednesday proposed a delay in the effective date of its new accounting standard for long-duration insurance contracts.
The proposed delay is consistent with a philosophy described in a proposal the board issued last week that would delay for certain entities the effective dates of the board’s standards on accounting for leases, credit losses, and hedging.
In last week’s proposal, FASB articulated a new philosophy for determining how effective dates for major standards would be staggered between larger public companies and all other entities. Under this philosophy, a major standard would take effect first for large public companies, with effective dates at least two years later for all other public and private companies and organizations. Early application would generally be expected to continue to be permitted for all preparers.
After receiving an agenda request to delay the insurance standard’s effective date by one year, FASB members and staff reached out to numerous insurance companies to understand their implementation challenges. Under the proposal, the effective dates for calendar-year reporting entities for the new insurance standard would be:
- January 2022 for SEC filers other than smaller reporting companies, an extension of one year.
- January 2024 for all other public business entities, including smaller reporting companies, an extension of three years.
- January 2024 for all other entities, an extension of two years.
“We believe it will result in a higher-quality implementation for all,” FASB Chairman Russell Golden said of the proposed new effective dates.
Comments on the proposal can be submitted by Sept. 20 at FASB’s website.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.