The Financial Accounting Standards Board (FASB) has proposed an Accounting Standards Update (ASU) that would grant private companies, not-for-profit organisations, and certain small public companies additional time to implement FASB standards on current expected credit losses (CECL), leases, and hedging.
The proposed ASU describes a ‘new FASB philosophy’ that extends and simplifies how effective dates for major standards are staggered between larger public companies and all other entities.
Those other entities include private companies, smaller public companies, not-for-profit organizations, and employee benefit plans. Under this proposal, a major standard would first be effective for larger public companies. For all other entities, the Board would consider requiring an effective date staggered at least two years later.
It is expected that early application would continue to be permitted for all entities.
FASB chairman Russell Golden said: “Based on what we’ve learned from our stakeholders, including the Private Company Council and the Small Business Advisory Committee, private companies, not-for-profit organizations, and some small public companies would benefit from additional time to apply major standards.
“This represents an important shift in the FASB’s philosophy around effective dates, one we believe will support better overall implementation of these standards.”
Stakeholders have been encouraged to review and provide comment on the proposed ASU by September 16, 2019.
