Extension of companies to adopt accounting standards
the Financial Accounting Standards Board (FASB), which sets accounting standards in the United States, gives companies more time to adopt certain revised standards, The Wall Street Journal said Thursday (October 17).
According to reports, the FASB approved a proposal earlier this week to give companies more time to adopt new standards related to hedging and leases, after vote in july delay implementation deadlines by one to three years. The FASB said it would release documents on these deadline changes next month.
The extension will impact private businesses and nonprofits, noted the reports, which now have until Dec. 15, 2020 to adopt changes in the way they report on covers and leases.
Other extensions will have an impact on lenders, who are facing changes in standards in the way they record expected future losses when issuing a loan, known as CECL, as well as a change that requires adjustments to the way these lenders value insurance contracts at long term, according to reports. Small government lenders and lenders who are not required to provide documentation to the SEC will have until December 15, 2022 to adopt the CECL.
In addition to the extended deadlines, the FASB said it will continue to hold workshops for small lenders to prepare them for changes to the CECL accounting standard. The December 15, 2019 deadline for major public lenders has not changed.
“What we’ve discovered in revenue accounting and leases is that small businesses have the opportunity to learn from big businesses,” said Russell Golden, president of the FASB, according to the WSJ.
Likewise, the FASB noted that private companies are looking to state-owned companies for advice on how to adopt lease accounting standards. According to Golden, state-owned companies have largely underestimated the challenge of adopting these new standards.
In a statement, American Bankers Association CEO Rob Nichols said the industry group was “deeply disappointed” that the FASB did not outright stop adoption of these accounting standards, and called to a “rigorous quantitative impact study” to assess its impact on businesses and lenders. .