The Financial Accounting Standards Board (FASB) voted unanimously on Wednesday, July 17, 2019, to propose delaying the effective date for portions of its major accounting standards, including ASC 842, Leases, for privately held companies and nonprofit organizations.
The delay means those companies now have an extra year to adopt the new lease accounting rules, subject to the FASB issuing a formal proposal for public comment before finalizing the new effective dates. For private companies, ASC 842 was previously scheduled to take effect for annual financial reporting periods beginning after December 15, 2019 (2020 for calendar year-end companies), and interim periods after December 15, 2020. The new leasing standard took effect for the calendar year public companies in January 2019. With the deferral, private companies will be required to adopt for annual financial reporting periods beginning after December 15, 2020 (2021 for calendar year-end companies).
Reasons cited for the implementation delay included struggles public companies have experienced with adopting and complying with the new lease standard and the ongoing implementation of the FASB’s new revenue recognition standard, which privately held companies are required to adopt in 2019.
GBQ is actively working with our assurance clients and has also been engaged by non-assurance clients on a consulting basis to assist with implementing both the new revenue and lease standards. Despite the deferred effective date, we continue to advise companies to proactively address the implementation of both standards, which typically takes more time than anticipated to evaluate and adopt.
For additional insights or assistance on the adoption of the new revenue standard please contact Jeff Harden (firstname.lastname@example.org), and for the new lease standard please contact Mary Stucke (email@example.com).