In response to the American Institute of Certified Public Accountants Private Companies Practice Section’s Technical Issues Committee (TIC) request letter from May 13, 2019, the Financial Accounting Standards Board (FASB) has voted to delay effective dates for three major standards for private companies and certain other entities. These standards include accounting for leases, credit losses (known as CECL) and hedging activities.

through a window, several black rolling chairs sit around a wooden table, a meeting room, maybe for FASB voting on delaying major standards

Currently, an Accounting Standards Update (ASU) is being drafted, which will change the effective dates. This will be issued after a formal written ballot by the board, expected to occur in November. FASB members shared that one of the advantages of the delay is to “allow preparers with limited resources to learn from the implementation performed by large public companies that possess more staffing and resources.”

According to an article from the Journal of Accountancy, here are the effective dates under the forthcoming ASU:

  • SEC filers: The hedge accounting and lease accounting effective dates would remain for fiscal years beginning after Dec. 15, 2018, and the credit loss effective date would remain for fiscal years beginning after Dec. 15, 2019, except for smaller reporting companies, whose credit loss effective date would be extended to fiscal years beginning after Dec. 15, 2022.
  • All other public business entities: The hedge accounting and lease accounting effective dates would remain for fiscal years beginning after Dec. 15, 2018, while the credit loss effective date would change from fiscal years beginning after Dec. 15, 2020, to fiscal years beginning after Dec. 15, 2022. The effective date of fiscal years beginning after Dec. 15, 2018, for lease accounting would also apply to employee benefit plans that file or furnish financial statements with or to the SEC as well as not-for-profit entities that have issued or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or over-the-counter market.
  • Private companies and all others: The hedge accounting and lease accounting effective dates would be delayed one year to fiscal years beginning after Dec. 15, 2020. The credit loss effective date would be delayed two years to fiscal years beginning after Dec. 15, 2022.

PKF Texas Director, Danielle Supkis Cheek, CPA, CFE, CVA, is the current Chair for TIC, and we’d like to thank her for speaking on behalf of our clients. We are also concerned about the impact of major accounting changes for our middle market clients. We will continue staying updated and share information as it becomes available.

For the full article, visit www.journalofaccountancy.com.