On Wednesday October 16, 2019, the FASB unanimously voted to delay the effective dates of three major Accounting Standards Updates (ASUs) for private companies and certain other companies. The major ASUs include ASU 2016-02 – Leases, ASU 2016-13 – Current Expected Credit Losses (CECL), and ASU 2017-12 – Hedging.
SEC filers will still be required to adopt the provisions of the lease amendment and the hedging amendment for fiscal years beginning after December 15, 2018. CECL is still effective for SEC filers for fiscal years beginning after December 15, 2019, except for certain smaller reporting companies whose required adoption effective date has been extended to fiscal years beginning after December 15, 2022.
Other public business entities will continue to follow the December 15, 2018 effective date for the lease accounting amendment and the hedging amendment, but the CECL effective date was extended to fiscal years beginning after December 15, 2022 for these types of entities. Employee benefit plans that file with the SEC and not-for-profit entities that are considered public business entities are still required to follow the December 15, 2018 effective date for leases.
The lease accounting amendment and the hedging amendment effective date is extended to fiscal years beginning after December 15, 2020 for private companies. The CECL adoption effective date is extended to fiscal years beginning after December 15, 2022 for private companies.
The final ASU that formalizes these decisions is expected to be drafted and voted on in November. While this relief is more than welcome, private companies should not delay project plan implementation. The key to a successful transition involves careful planning and setting firm deadlines leading up to the required adoption date.
Schneider Downs has created a proprietary software, simpLEASE, that can simplify the transition to the new standard. Visit the simpLEASE website for more information.
