United States

FASB proposes deferred effective dates for leases, CECL and hedging

FINANCIAL REPORTING INSIGHTS  | 

The Financial Accounting Standards Board (FASB) recently issued a proposed Accounting Standards Update (ASU), Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. If finalized, this proposal would defer the effective dates for certain guidance in the FASB Accounting Standards Codification (ASC) for certain entities as follows:

Guidance affected

Type of entity

Proposed effective date change

ASC 326, Financial Instruments—Credit Losses

SEC filers (as defined in the ASC) other than smaller reporting companies (as defined by the SEC)

No change: Effective date for an SEC filer that is not a smaller reporting company with a calendar year end continues to be its quarter beginning January 1, 2020

Smaller reporting companies

Three-year deferral: Effective date for a smaller reporting company with a calendar year end will change from its quarter beginning January 1, 2020 to its quarter beginning January 1, 2023.

All other entities

One- or two-year deferral: Effective date for an entity other than an SEC filer with a calendar year end will change from its year (and interim period, if applicable) beginning January 1, 2021 or 2022 (as otherwise required) to its year (and interim period, if applicable) beginning January 1, 2023.

ASC 842, Leases

Public business entities (PBEs) (as defined in the ASC); not-for-profit organizations that have issued, or are conduit bond obligors for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market; and employee benefit plans that file financial statements with the SEC

No change: Effective date for a PBE with a calendar year end continues to be its quarter beginning January 1, 2019.

All other entities

One-year deferral: Effective date for all other entities with a calendar year end will change from the year ending December 31, 2020 to the year ending December 31, 2021 and interim periods beginning January 1, 2022.

Amendments to ASC 815, Derivatives and Hedging

PBEs

No change: Effective date for a PBE with a calendar year end continues to be its quarter beginning January 1, 2019.

All other entities

One-year deferral: Effective date for an entity other than a PBE with a calendar year end will change from its year ending December 31, 2020 to its year ending December 31, 2021 and interim periods beginning January 1, 2022.

The Board also will address the effective dates for ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, as part of a separate project.

The proposed ASU is available for comment until September 16, 2019 and includes information regarding the FASB’s philosophy to simplify how effective dates are staggered between larger pubic companies and all other entities.