By Ken Tysiac at Journal of Accountancy on August 15, 2019
Certain financial statement preparers would receive the benefit of effective date delays in FASB’s accounting standards for leases, hedging, and credit losses under a proposal the board issued Thursday.
In response to preparers’ concerns about overload while implementing these three significant standards, FASB proposed amending the effective dates.
“Private companies, not-for-profit organizations, and some small companies would benefit from additional time to apply major standards,” FASB Chairman Russell Golden said in a news release. “This represents an important shift in the FASB’s philosophy around effective dates, one we believe will support better overall implementation of these standards.”
In the proposal, FASB articulates a new philosophy that would extend and simplify how effective dates for major standards are staggered between larger public companies and all other entities, including private companies, smaller public companies, not-for-profits, and employee benefit plans.
The philosophy calls for a major standard to take effect first for larger public companies, with the board considering requiring an effective date for other entities at least two years after the larger public company effective date. Early application would be generally expected to be permitted for all entities.