Assurance Services • Published 11/17/2021 No Further Deferral of ASC 842 for Private Entities

On November 10, 2021, the Financial Accounting Standards Board (FASB) unanimously rejected a stakeholder request to defer the lease standard for a third time for private companies and not-for-profit organizations.

What happened?

The Pennsylvania Institute of Certified Public Accountants (PICPA) submitted a request for an additional two-year delay. Reasons cited in the request included continued COVID-19 pandemic disruption and concerns about the time and resources needed to implement the standard.

As a result of this decision, the effective dates remain fiscal years beginning after December 15, 2021 (for annual periods), and fiscal years beginning after December 15, 2022 (for interim periods).

How we see it:

Any uncertainty about, or hope for, further deferrals should be set aside. There will be no further deferrals, as noted by FASB Chair Richard Jones’ comment “the adoption requirements are imminent.”    

Private entities and not-for-profit organizations that have delayed their ASC 842 implementation efforts should act now. Those efforts may include:

• Re-examining and potentially changing existing processes;
• Reviewing service contracts for embedded leases;
• Selecting and implementing lease accounting software; and
• Scheduling discussions with lenders about the effect of implementation on covenants.

How P&N can help:

P&N professionals have experience assisting companies with ASC 842 implementation. Please reach out to the following lease accounting professionals at P&N to discuss how we can assist:

Kelly Hidalgo (225) 408-4703

Kraig Cason (337) 354-8979

Lynne Burkart (504) 335-3233

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