On Wednesday, July 17th, the Financial Accounting Standards Board (FASB) voted to propose a delay on the effective dates for four recent accounting standards including lease accounting, credit losses, hedging, and long-duration insurance contracts. When finalized, the new proposal will delay the effective date of the lease accounting standards until 2021 for calendar year reporting entities.
This delay would benefit the private companies, not-for-profit, and small reporting companies that have not yet been impacted by the standards, unlike public companies, who were required to implement the standards starting in January of 2019.
FASB recognizes that the implementation of these accounting standards represents a significant undertaking for these companies and organizations. The delay will provide them with additional time to gather information and review the financial statements of public companies that have adopted the standards to develop a deeper understanding. In addition, these companies’ resources were stretched thin by the overlapping effective date of the new complex revenue recognition standards. As public companies have struggled with the implementation of the standards, it is likely the proposed effective dates will be approved.
During Wednesday’s forum, the board implied that this two-year delay of effective dates for major accounting standards updates between public and private companies may become the new standard.