Proposed Accounting Standard Update Would Delay Private Company Effective Dates for Leases, Current Expected Credit Losses (CECL) and Hedging Updates by One Year

On July 17, 2019, the Financial Accounting Standards Board (FASB) voted unanimously to move forward with delaying the effective start date for recent accounting changes to leases, CECL and hedges by one year for most non-SEC filers.  The FASB directed its staff to draft a Proposed Accounting Standards Update (PASU) for formal vote and finalization at a future meeting.

This decision comes after the FASB discussed a change in philosophy on establishing effective dates for major projects for private companies, not-for-profit organizations and smaller public companies.  After consultation with stakeholders, the FASB considered various challenges and related costs encountered by these entities when transitioning to a major standard, including the availability of resources, timing and source of education, ability to learn from the implementations of larger public companies, development of sufficient IT system changes and other such concerns. 

This new philosophy would introduce a two-bucket approach to stagger effective dates for major accounting standard updates.

  • Bucket One – Includes SEC filers, but excludes smaller reporting companies (SRC) as currently defined by the SEC.
  • Bucket Two – Includes all other entities

Going forward, entities within Bucket Two would be afforded an effective date of at least two years after the effective date established for Bucket One on new major standards.

The FASB will continue researching this new two-bucket philosophy, but will also move forward with the PASU delaying the effective date of leases, CECL, and hedges.  This PASU will include a 30-day comment period before the FASB formally votes on the delay.  Schneider Downs will continue to keep you informed of ongoing developments related to these changes. For additional questions, please contact Schneider Downs.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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