The Financial Accounting Standards Board is providing private companies and nonprofit organizations an extra year to comply with the revenue recognition and leases standards. As businesses are currently wrestling with the implications of the coronavirus pandemic, the Board felt that the delay was warranted. The final standard was released June 3.
Under the proposal that was issued by FASB last month, the delay was only going to affect franchisor businesses, but FASB has ultimately extended the deferral to all private companies and nonprofits that have not yet issued financial statements or made them available for issuance. Public companies have been using the revenue recognition standard since 2018.
The lease accounting standard for private companies and private not-for-profit organizations will be deferred another year and will now be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is still allowed.
Nonprofit entities that have issued or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or an over-the-counter market and haven't yet issued, or made available for issue, financial statements reflecting the adoption of the leases standard, FASB affirmed its decision to amend the effective date of the standard. For those organizations, the effective date will be fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
If you have any questions, please reach out to your MarksNelson advisor at (816) 743-7700.