While it was good news for private companies following FASB’s recent announcement to delay the effective date to December 15, 2020 for standards on accounting for leases, businesses are being advised to keep working in high gear.
“The delay is intended to allow preparers with limited resources to learn from the implementation performed by the larger public companies,” says Ryan Dreher of K·Coe Isom’s audit team.
“But there is still much work to be done for many companies dealing with less staff and resources, and while this delay was needed to help address that void, businesses shouldn’t pull back on addressing the huge task at hand and instead use this extra time to their advantage.”
FASB’s official Accounting Standards Update (ASU) to delay the effective date was released on November 15, declaring the delay of the lease accounting effective date one year to fiscal years beginning after December 15, 2020 for private companies and all others.
Early-adoption options for the standards will remain unchanged.
Private companies should continue to:
- Inventory, analyze, and account for leases and embedded leases
- Implement new internal controls during the transition
- Perform ongoing maintenance activities and financial reporting
- Deploy new IT systems to store and manage lease data
For more information on adoption to these standards, read our blog “New Guidance for Leasing Standard Implementation.”
Contact a K·Coe Isom advisor with questions or issues regarding preparation and applicability of the new lease accounting standard.