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Posted by Heather Winiarski on Thu, Aug 1, 2019 @ 03:12 PM

Leasing - Jigsaw Puzzle with Missing Pieces. Bright Green Background. Close-up. 3d Illustration.Not-for-profit organizations, private companies, and smaller reporting companies received welcome news on July 17. The Financial Accounting Standards Board (FASB) voted to issue proposals that would delay the effective date for changes to leasing, current expected credit loss (CECL), and hedge accounting. A second proposal would delay accounting for long-term insurance contracts as well.

How We Got to the Delay

Private companies and not-for-profit organizations have been thought to be behind the ball when it comes to adopting the leasing standard updates to ASC Topic 842, Leases. Calendar year public companies adopted the standard in the first quarter, and many have found tracking and recording the leases to be more time intensive than originally anticipated. Back in May, the AICPA even asked the FASB to delay the leasing effective date for private companies because of the lack of resources available to handle the adoption, the failure of software companies to create comprehensive lease solutions, and the time constraints it was putting on the financial statement preparation process.

Financial services companies have also been asking for additional time for a complex accounting issue, the credit loss impairment standard’s changes, which include the introduction of the CECL model to ASC Topic 326. Up until now, relief from the changes to the credit loss impairment rules hadn’t looked promising. Several regional banks submitted proposed changes to the FASB to make the credit loss reporting less difficult for financial services organizations, but the FASB rejected the proposal in the spring.

Changes to ASC Topic 815, Derivatives and Hedging, were designed to make hedge accounting easier, but the timing of the changes—which were set to roll out at the same time as the leasing standard—may have been the reason why it was also among the accounting standards with a proposed effective date delay.

Not-for-profit organizations, private companies, and smaller reporting companies had been scheduled to adopt the leasing changes and the hedge accounting changes in the 2020 calendar year. Under the proposed changes, they will adopt those standards in the 2021 calendar year. The CECL changes had been set to take effect in the 2022 calendar year for not-for-private organizations and private companies, and under the proposal, these groups will join smaller reporting companies in adopting the credit loss impairment standard in calendar year 2023.

What Does the Delay Mean for SEC Filers?

FASB’s vote to issue a proposed accounting standard for effective date delays for leasing and hedging comes too late for public companies, who are already adopting the changes. Delays are not expected for the implementation date for the CECL model, either.

But public companies are not wholly left out of the conversation around how to ease the adoption of complex accounting standards. The FASB also voted to release a proposal that would delay the effective date for changes to how insurance companies account for long-duration contracts. Delays to the standard, issued in ASU 2018-02, would push the effective date back to the 2022 calendar year for this group and to 2024 for all others.

Longer Roll Outs to Come?

As part of its meeting on July 17, the FASB also discussed whether it would be appropriate to provide longer delays on the implementation date for some companies and whether smaller reporting companies should have deferred effective dates similar to private companies. The FASB is considering allowing for two years between the effective date for SEC filers and all other groups for future complex accounting updates. Not-for profit organizations, private companies, and smaller reporting companies stand to benefit from the lessons learned by public companies when it comes to implementation, board members noted. Minor accounting updates would continue to use the standard protocol that exists today, which typically affords a one-year delay for private companies and not-for-profit organizations.

What’s Next?

Now that the FASB voted to issue the proposed changes, it will work on releasing the proposed accounting standards update. The public will be able to comment on the proposed changes before the FASB releases the final accounting standards updates to delay the effective dates of the leasing, hedging, credit loss impairment, and long-term insurance contract standards.

For more information on how these changes affect your organization, please contact us.


Heather-WiniarskiHeather Winiarski is a Director in Kansas City, MO. She can be reached at 816.945.5168 or




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Tags: not-for-profit, NFP, nonprofit, Leasing, leasing standard

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