In July 2019, the Financial Accounting Standards Board (FASB) voted to delay the new leasing standard, which was set to take effect for private companies and not-for-profit organizations beginning after December 15, 2020. Given the impact of the coronavirus pandemic, the FASB again has put forth a proposal to delay the effective date for one year making the effective date December 15, 2021. Overall, this will be a welcome reprieve due to the current uncertainty facing private companies and not-for-profit organizations. It will allow management to focus on navigating difficult financial circumstances. FASB directed staff to draft a proposal with a 15-day comment period. The deferment of the standard is not effective until after the 15 day comment period.
In addition, FASB will continue to monitor the impact the pandemic has on effective dates for other standards scheduled to be effective in 2021 and 2022.
FASB recognizes that the implementation of these accounting standards represents a significant undertaking for these companies and organizations, especially during these times of uncertainty. 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 put tremendous resources towards the implementation of the standards and given the new challenges companies are currently facing due to global economic uncertainty, it is likely the proposed effective dates will be approved.
For more information, please visit FASB’s website.
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