The following four standards now have delayed effective dates:
- ASC 842, Leases
- ASC 815, Derivatives and Hedging
- ASC 326, Financial Instruments—Credit Losses
- ASC 944, Financial Services—Insurance
On July 17, 2019, the Financial Accounting Standards Board (FASB), voted unanimously to propose delaying effective dates for four new standards for certain financial statement preparers. At it’s meeting on October 16, 2019, the FASB decided to move forward with finalizing the proposal to defer the effective dates for these standards.
ASC 842, Leases - The revised effective date for the lease standard for non-public entities is fiscal years beginning after December 15, 2020. For calendar-year end companies, this would be January 1, 2021, which is an extension of one year from the previous effective date.
The FASB cited several reasons for the extension of the new lease standard, the most significant being the scope and complexity of the new standard which was requiring significant resources to implement by companies. Time required to educate staff, efforts to gather leases and extract the relevant data, application of difficult transition guidance, and challenges to creating and implementing IT system solutions were all factors in the decision. Furthermore, this change in accounting also came at a time when companies were already dealing with implementation of new revenue recognition standards under ASC 606.
The FASB also wanted to give non-public entities more time to learn from implementation and disclosures described in public company filings and SEC comment letters.
ASC 815, Derivatives and Hedging - The new effective date for the derivatives and hedging standard for calendar-year-end, non-public entities is January 1, 2022, an extension of one year from the previous effective date.
ASC 326, Financial Instruments—Credit Losses - The new effective date for accounting for credit losses for calendar-year-end, non-public entities as well SEC filers defined as smaller reporting companies, is January 1, 2023.
ASC 944, Financial Services—Insurance - The new effective date for the standard related to long-duration insurance contracts for calendar-year-end, non-public entities is January 1, 2024.
Early adoption is still permitted under the extension.
The FASB responded to comments from companies that while they would be able to implement the changes before the old deadline, an extension would allow them to improve processes and revamp their entire business approach to these issues while changing the accounting.
For more information on theses changes, please contact the head of our Accounting and Auditing Department, Brandi DiGiorgio or your MarksNelson professional.