FASB proposes delays in 3 key effective dates

By Ken Tysiac

Certain financial statement preparers would receive the benefit of effective date delays in FASB’s accounting standards for leases, hedging, and credit losses under a proposal the board issued Thursday.

In response to preparers’ concerns about overload while implementing these three significant standards, FASB proposed amending the effective dates.

“Private companies, not-for-profit organizations, and some small companies would benefit from additional time to apply major standards,” FASB Chairman Russell Golden said in a news release. “This represents an important shift in the FASB’s philosophy around effective dates, one we believe will support better overall implementation of these standards.”

In the proposal, FASB articulates a new philosophy that would extend and simplify how effective dates for major standards are staggered between larger public companies and all other entities, including private companies, smaller public companies, not-for-profits, and employee benefit plans.

The philosophy calls for a major standard to take effect first for larger public companies, with the board considering requiring an effective date for other entities at least two years after the larger public company effective date. Early application would be generally expected to be permitted for all entities.

Under the proposal, effective dates for the lease accounting, hedge accounting, and accounting for credit losses standards would be affected as follows:

  • SEC filers: The hedge accounting and lease accounting effective dates would remain January 2019, and the credit loss effective date would remain January 2020, except for smaller reporting companies, whose credit loss effective date would be extended to January 2023.
  • All other public business entities: The hedge accounting and lease accounting effective dates would remain January 2019, while the credit loss effective date would change from January 2021 to January 2023. The January 2019 effective date for lease accounting would also apply to employee benefit plans and not-for-profit conduit bond obligors that file or furnish financial statements with or to the SEC.
  • Private companies and all others: The hedge accounting and lease accounting effective dates would change from January 2020 to January 2021. The credit loss effective date would change from January 2021 to January 2023.

Comments on the proposal can be submitted to FASB by Sept. 16 at the board’s website.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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