FASB Proposes Delay in Effective Date for Lease Accounting
Published April 14, 2020
On Wednesday, April 8th, The Financial Accounting Standards Board (FASB) voted unanimously to propose a delay to the effective date for the implementation of the new lease accounting standard, ASC 842, for private entities and not-for-profits (NFPs). This delay is to provide relief to entities in response to the challenges in the work environment created by the COVID-19 pandemic. The proposed delay in the effective date would make implementation effective for fiscal years beginning after December 15, 2021.
Additionally, this delay is stated to include any NFP that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market that has not yet issued financial statements. For these entities, the proposal would modify the implementation to be effective for fiscal years beginning after December 15, 2019 with early adoption permitted. Further guidance for these entities is anticipated to be included in the finalized proposal.
Once finalized, the proposal will enter a 15-day comment period to allow stakeholders the opportunity to provide input.
The new standard took effect for public companies, employee benefit plans, and NFP conduit bond obligors in January 2019 and was originally intended to take effect for private companies for reporting periods beginning after December 15, 2019. This would be the second time this standard is delayed for private companies. The first delay, issued in 2019, pushed the implementation date to January 2021 and was primarily driven by implementation hardships being encountered by public companies.
If you have questions on how this delay will affect you and your company, please reach out to your MCM professional or Senior Assurance Manager Scott Maloy, CPA, via e-mail at firstname.lastname@example.org or phone (502.882.4446).