On Wednesday April 8, in light of the COVID-19 pandemic, the Financial Accounting Standards Board (FASB) voted unanimously to consider changing the effective date of two Accounting Standard Codification updates (ASUs) with looming implementation dates. The FASB staff will be drafting a proposal with a 15-day comment period.
The proposal will feature potential delays to ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and ASU 2016-02, Leases (Topic 842).
The revenue recognition standard was effective January 1, 2019, for calendar-year-end public companies. This guidance is effective for annual periods, meaning that many private companies have already been taking steps to implement its guidance, and the first audit of financial statements that have implemented this standard may very well be underway.
The lease accounting standard was effective January 1, 2019, for calendar-year-end public companies and not-for-profit entities that are a conduit bond obligor (public not-for-profits). Many hospitals and health systems are classified as public not-for-profits and are on the frontlines of fighting this pandemic. The proposal would push the effective date for these entities to fiscal years beginning after December 15, 2019. This means that a public not-for-profit with a June 30 year end will not have to implement the standard until issuing its June 30, 2021, financial statements.
The lease accounting standard is not effective for private companies and not-for-profits, until fiscal years beginning after December 15, 2020. The deferment in the proposal would change the effective date for these companies to fiscal years end beginning after December 15, 2021.
FASB Chairman Russell Golden mentioned that the FASB will consider additional deferments, if they become necessary, due to the pandemic. Additional information regarding this proposal and other measures the FASB is taking regarding COVID-19 may be found in these resources: Journal of Accountancy and FASB Statement. We will also provide additional updates with any new information.
If you have any questions or concerns about these delays and guidance, or would like additional information related to COVID-19, visit PYA’s COVID-19 hub, or contact one of our PYA executives below at (800) 270-9629.
Disclaimer: To the best of our knowledge, this information was correct at the time of publication. Given the fluid situation, and with rapidly changing new guidance issued daily, be aware that some or all of this information may no longer apply. Please visit our COVID-19 hub frequently for the latest updates, as we are working diligently to put forth the most relevant helpful guidance as it becomes available.
