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Focus on Assurance: FASB Votes To Propose Delay In Effective Dates Of Four ASUs For Certain Entities

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The FASB has voted to propose a deferral of the effective dates for several of its recent standards that would provide at least an additional year to companies that have not yet adopted the standards.
July 18, 2019

The FASB has voted to propose a deferral of the effective dates for several of its recent standards that would provide at least an additional year to companies that have not yet adopted the standards.

This decision is expected to create two new categories for entities:

1)    SEC filers other than smaller reporting companies, as defined by the SEC

2)    All other entities

For the other entities, a one or two year difference in effective dates is anticipated.

For ASU 2016-02, Leases (Topic 842) and ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, if adopted, the effective date for the standards would be for fiscal years beginning after December 15, 2020 for entities that are not public business entities. This is a one-year deferral period from the current effective date.

For ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, if adopted, the effective date for the standard would be for fiscal years beginning after December 15, 2022 for entities that are not public business entities and for small reporting companies. This is a two-year deferral period from the current effective date.

For ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, if adopted, the effective date for the standard would be for fiscal years beginning after December 15, 2023 for entities that are not public business entities and for small reporting companies. This is a two-year deferral period from the current effective date. Additionally, for public business entities, the FASB has voted to propose a one-year deferral of the effective date that would be for fiscal years beginning after December 15, 2021.

Public business entities include those that file or furnish financial statements with or to the SEC, including employee benefit plans, and not-for-profit entities that have issued or are conduit bond obligors for securities traded, listed or quoted on an exchange or over-the-counter market. Small reporting companies are SEC filers with a public float of less than $250 million, or annual revenue of less than $100 million and either no public float or a public float of less than $700 million.

The purpose of the deferrals is intended to provide relief to certain entities for which transitioning to new standards is difficult. The decision to propose the deferrals of its recent standards is a result of outreach to various stakeholders and entities.

The FASB is expected to propose the amendments on which it will vote and an exposure draft is anticipated to be available for public comment.

 

Readers should not act upon information presented without individual professional consultation.

 

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