Deferral Applies to Accounting for Leases, Hedging, Credit Losses and Long-Duration Insurance Contracts
Many private companies, not-for-profit organizations and small public companies will have more time to meet major new accounting requirements related to leases, hedging, current expected credit losses (CECL) and long-duration insurance contracts.
The Financial Accounting Standards Board (FASB) has officially postponed the effective dates of the new requirements in response to reports of significant challenges for smaller companies and nonprofits as well as larger companies that have had to implement the new standard.
FASB has modified the effective dates for leases, hedging, CECL and long-duration insurance contracts as follows:
*Also includes Employee Benefit Plans and Not-for-Profit Conduit Bond Obligors that file or furnish financial statements with or to the SEC.
Don’t Let This Slow You Down!
While the deferral is good news for entities that have faced difficulties putting the new standards into place within the original timeline, it is important not to be complacent. Implementing the updated standards can be expensive and time-consuming, based on feedback from the public companies that were, or will be, first subject to the new rules. So, even with a one- or two-year reprieve, those subject to the new requirement should continue to work on implementing the new standards and use the additional time to address challenges that may arise.
This is true especially for requirements related to leases, since they have broad implications for almost all industries, including the possibility that debt agreements may need to be revised.
Also, it is important to note that some entities that would seem to qualify for the delay will not be eligible and will have to meet current timelines. For example, some not-for-profit organizations, because of connections to large public companies, have not been granted a delay and will need to put the new lease standard into place for calendar year 2019.
Significant time and effort is expected to comply with the new accounting rules. Contact Weaver today for assistance and implementation guidance.
For more information about the change, see FASB Seeks Deadline Extension for Hedging, Leases and CECL.
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