FASB decided on 7/17/19 to postpone four major accounting rule changes for non-public companies. Journal of Accountancy reported the news on 7/17/19: FASB to propose delaying effective dates for 4 major standards.
Two of the rules are particularly significant to the non-profit community while two will affect few charities.
The article uses a new method of identifying effective dates. It mentions January 1 of the year the standard will first be effective instead of the ol’ “fiscal years beginning after December 15” phrasing usually used..
- Lease accounting – ASU 2016-02 – Currently will be effective for 12/31/20 financial statements. Proposal is for effective date to be 12/31/21, which would be a one year delay.
- Credit losses – ASU 2016-13 – Currently will be effective for 12/31/21 financial statements. Proposal is for 12/31/23 effective date. That will be an extra two years.
- Derivatives & hedging – one year delay.
- Long-durance insurance contracts – one year, I think (won’t double check that at the moment).
I have a recap of the major accounting changes on the horizon: Before the tsunami hits it might be time to tune into the accounting rules on the horizon.
The extra two years for credit losses will be very nice for those charities affected by ASU 2016-13. I’m talking to a client about that rule and am increasing aware how painful it will be. I expect colleges and universities have a particularly difficult time.
Update: The technical discussion from FASB can be found at Wednesday July 17, 2019 FASB Board Meeting. Board is adding projects to its technical agenda, which will bring through their system revisions to effective dates. Consideration is for effective date of leases for non-public entities to be fiscal years beginning after December 15, 2020, which means calendar years ending 12/31/21. For non-public entities, credit loss effective date will be fiscal years beginning after December 15, 2022, which means 12/31/23 for calendar year end financials.