Accounting Standards Effective Dates Delayed

October 2019 | Article

The Financial Accounting Standards Board (FASB) recently voted to delay effective dates of four upcoming accounting standards. The move was widely expected and followed proposed delays communicated by the FASB late this past summer.

For many organizations, the delays are a welcome relief as many entities quickly found themselves behind in preparing for the significant changes.

Here is a summary of the changes made by FASB:

Leasing Standard (Topic 842), (ASU No. 2016-02)
The amendments do not impact the effective date for:

  • Public business entities
  • U.S. Securities and Exchange Commission (SEC) filers
  • Employee benefit plans that file or furnish financial statements with or to the SEC
  • 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

The effective date for these entities remains for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

For all other entities, the standard will now be effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early application is allowed.

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU No. 2016-13)
The amendments do not impact the effective date for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies (SRCs) as defined by the SEC. The effective date for these entities remains for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

For all other entities, including SRCs, the standard will now be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application is allowed.

Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU No. 2017-12)
The amendments do not impact the effective date for public business entities and SEC filers. The effective date for these entities remains for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

For all other entities, the standard will now be effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early application is allowed.

Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (ASU No. 2018-12)
For public business entities that meet the definition of an SEC filer, excluding eligible SRCs, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

For all other entities, including SRCs, the standard will now be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application is allowed.

Additional Delays from FASB
In addition to these changes, the FASB also voted to align the effective date of ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment, with the amended effective dates for the credit loss standard.

What the Delays Mean for Your Business
While several of these standards are delayed, it is still important to prepare your business in advance. These standards impact industries and organizations of all sizes and will have a significant impact to accounting and finance policies. The additional time given by FASB is meant to allow organizations to not only implement, but also improve their approach to the new accounting standards.

Don’t Delay!
These accounting standards will still have a significant impact on your business.

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