FASB Issues Proposed ASU Delaying the Effective Dates for Credit Losses, Leases, Hedging, and Long-Duration Contracts
The FASB has issued a proposed Accounting Standards Update (ASU) that would grant private companies, not-for-profit organizations (NFPs), and certain small public companies additional time to implement FASB standards on leases, current expected credit losses (CECL), and hedging. An additional proposed ASU was issued granting insurance companies that issue long-duration contracts, such as life insurance and annuities, additional time to apply a standard affecting this area of financial reporting.
A summary of the proposed changes is as follows:
- Lease accounting - The new effective date for companies with a calendar year-end that are not public business entities would be January 1, 2021, a one-year extension. The effective date for calendar year-end public business entities, employee benefit plans that file or furnish financial statements with the SEC, and not-for-profit conduit bond obligors would remain January 1, 2019.
- Credit losses - The effective date for calendar year-end SEC companies, excluding smaller reporting companies, would remain January 1, 2020. The new effective date for all other calendar year-end companies would be January 1, 2023.
- Derivatives and hedging - The effective date for calendar year-end public business entities would remain January 1, 2019. The new effective date for calendar year-end companies that are not public business entities would be January 1, 2021, a one-year extension.
- Long-duration insurance contracts - The new effective date would be January 1, 2022, for calendar year-end public business entities and January 1, 2024, for all other entities with a calendar year-end.
Stakeholders are encouraged to review and provide comments on the proposed ASU by September 16, 2019.
Credit Losses, Leases, and Hedging
Long-Duration Contracts for Insurance Companies
P&N is working to provide seminars, webinars, and other resources designed to help you understand and implement these changes. Although the effective dates may be delayed, it is critical to continue to focus on these accounting standards. Please contact P&N if you need assistance.