When SobelCo sends out tax and accounting alerts to our clients and colleagues in the business community, it is usually to serve as a reminder regarding upcoming dates for complying with new regulations, pronouncements, or acts.

This article is being sent to you to alert you of a significant delay that was just announced after a unanimous vote by the Financial Accounting Standards Board (FASB) that will impact the accounting for private companies and certain other entities regarding:

  • Leases
  • Credit losses (CECL) 
  • Hedging 

The FASB has directed its staff to draft an update in order to change the effective dates. It is expected that the draft will be issued following a formal written ballot by FASB sometime in November.

Early adoption options for these standards will not be changed!

Why is there a delay in implementing effective dates in these specific areas?

The FASB members agree that one of the key advantages of the delay is that preparers with limited resources will be able to learn from the large public companies. These companies have already adopted the standards and have access to greater staffing and expanded resources for smoother implementation compared to those available for smaller companies.

Having more time to go through one annual audit cycle and regulatory cycle will help nonprofit organizations, smaller and privately-held companies have a more successful, high quality implementation experience.

What does the delay of effective dates in these three categories mean for your company?

For private companies and all others: The change in effective dates for hedging accounting and lease accounting would results in a one year delay to fiscal years beginning after December 15, 2020. The change in the effective date for credit loss would result in a two year delay, for fiscal years beginning after December 15, 2022.   

For SEC filers: The effective dates for hedge and lease accounting would remain unchanged for fiscal years beginning after December 15, 2018 and the effective date for accounting for credit loss would also remain for fiscal years beginning after December 15, 2019. The exception would be for smaller reporting companies who credit loss effective date would be extended to fiscal years beginning after December 15, 2022.

For all other public entities: There would be no change to the effective dates for hedge and lease accounting as these would remain the same for fiscal years beginning after December 15, 2018.

It should be noted that for lease accounting the effective date for fiscal years beginning after December 15, 2018, would also apply to employee benefit plans that file or furnish statements with, or to, the SEC as well as nonprofit entities that have issued, or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or over-the-counter market.

These are important date extensions. Please feel free to contact us if you have any questions!

Brad Muniz at Brad.Muniz@SobelCoLLC.com

Liz Harper at Elizabeth.Harper@SobelCoLLC.com