Several landmark accounting rules will likely be delayed for certain companies. Last week, the Financial Accounting Standards Board (FASB) voted to issue a proposal for the delays. The deferral, if finalized, will apply to new guidance for reporting leases, hedging transactions, credit losses, and long-term insurance contracts.
See the proposed implementation date changes below:
Smaller reporting companies refer to those that have either 1) a public float of less than $250 million, or 2) annual revenue of less than $100 million and no public float or a public float of less than $700 million.
Public companies are first to implement major accounting standards updates, and we often see private companies and nonprofits given an extra year to comply. But FASB seems to be shifting its stance and is giving certain entities even longer to implement the changes.
So, why the delays?
Many companies are still struggling with the new revenue recognition guidance that was effective in 2018 for public companies and 2019 for other entities. The expected deferral of the new rules will assist smaller entities to learn from SEC-registered companies. This delay will also give software accounting software providers more time to update their products to comply with the new reporting models.
Proposal coming soon
The FASB is expected to issue its proposal soon, followed by a 30-day comment period.
If these deferrals are finalized, many organizations will celebrate, but JLK Rosenberger encourages companies not to procrastinate. Your entity may need significant resources to implement the changes. Contact us at 818-334-8631, or click here, before the implementation deadline to come up with a realistic game plan. We look forward to hearing from you.