Recently, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update for private companies to delay the new guidance for reporting substantially all leases on the balance sheet. The resulting new lease standard implementation date for private companies will be for years beginning after December 15, 2020.
Private companies often receive an extra year to implement major accounting standards updates, compared to the effective dates that apply to public companies. In a shift in its philosophy for setting reporting dates on major new accounting standards, the FASB wanted to give private companies even longer to implement the changes.
Why is this delay needed? Many entities continue to struggle with implementing the new revenue recognition guidance that went into effect in 2018 for public companies and 2019 for other entities. A deferral of the new leasing rules will also allow private companies to learn how to implement the changes from public companies that have already adopted the new rules – and it will give accounting software providers extra time to update their packages to support the new reporting models.
This deferral is welcome news for private companies. But it’s not a reason to delay. Depending on your industry and the nature of your transactions, implementing the changes and educating stakeholders could take significant resources. Please contact your Lurie trusted advisor to help plan for implementation.
For more information contact Dan Utz, Derek Chamberlain, or your Lurie trusted advisor.