Regulations

FASB May Delay Effective Dates for CECL, Lease, Hedging, Insurance Standards

• Elly Barrineau
• 7/25/2019

The Financial Accounting Standards Board (FASB) has proposed a deferral of the effective dates for ASC 326, Financial Instruments — Credit Losses (CECL); ASC 842, Leases; the recent amendments to ASC 815, Derivatives and Hedging, and the recent amendments to ASC 944, Financial Services — Insurance. The new dates would apply to certain private companies, nonprofits, and employee benefit plans. The proposal would establish a “two bucket” approach to categorize entities and their respective effective dates for these four standards.

Proposals apply to six entity types

Entities under consideration for potential delay of effective dates:

1. Public business entities (PBEs) that file with the SEC, excluding smaller reporting companies (SRCs)
2. PBEs that are considered SRCs that file with the SEC — determination of whether an entity is an SRC will be based on an entity’s most recent assessment in accordance with SEC regulations
3. Non-SEC filing PBEs
4. Private companies
5. Nonprofit organizations, including those that have issued, or are conduit bond obligors for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market
6. Employee benefit plans, including those filing financial statements with the SEC

Proposed effective dates

For the CECL (current expected credit losses) and Insurance standards, the two buckets are:
	Bucket 1: SEC filers, excluding SRCs	Bucket 2: All other entities
CECL	Fiscal years beginning after December 15, 2019	Fiscal years beginning after December 15, 2022
Insurance	Fiscal years beginning after December 15, 2021	Fiscal years beginning after December 15, 2023

For the Hedging and Lease standards, the two buckets are:
	Bucket 1: Public business entities (PBE)	Bucket 2: All other entities
Hedging	Fiscal years beginning after December 15, 2018	Fiscal years beginning after December 15, 2020
Leases	Fiscal years beginning after December 15, 2018*	Fiscal years beginning after December 15, 2020

*It is important to note that only when applying the Leases standard, Bucket 1 also includes nonprofit organizations, that have issued, or are conduit bond obligors for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market and employee benefit plans that file financial statements with the SEC.

FASB staff has been directed to draft a proposed accounting standards update (ASU) for a vote on these proposed amendments and establish a 30-day comment period.

How we can help

CLA assurance professionals are monitoring these proposed amendments closely and the firm will submit comments to FASB. We encourage our clients to do the same. We are anxious to hear your input on FASB’s actions, and can help you determine their potential impact on your organization.