FASB Proposes Delays in CECL and Lease Standards
FASB plans to propose delays in the effective dates for two major standards affecting many community bankers, CECL and Leasing. They are also proposing delays in the Derivative and Long-duration insurance contracts standards.
The board voted to ask its staff to prepare two exposure drafts (ED), one for the Long-duration insurance contacts and another for the other three standards. Once those drafts have been approved by FASB, the EDs would be issued with 30-day comment periods.
Various reasons for the delay include the implementation of other complex FASB standards, availability of resources, education and development of effective solutions.
The proposed changes are:
- Lease accounting: The new effective dates for calendar-year-end preparers that are not public business entities would be January 1, 2021. The effective date for calendar-year-end public business entities, employee benefit plans and not-for-profit conduit bond obligors in January 1, 2019, which is unchanged.
- Accounting for Credit Losses (CECL): The effective date for calendar-year-end SEC filers, excluding smaller reporting companies as defined by the SEC, remains January 1, 2020. The new effective date for all other calendar-year-end entities would be January 1, 2023. The change would extend the effective date for smaller reporting companies, private companies, and other non-SEC filers. The proposed change would treat smaller reporting companies like SEC emerging growth companies for purposes of the standard.
- Derivatives and hedging: The effective date for calendar-year-end public business entities is January 1, 2019 and unchanged. The new effective date for calendar-year-end prepares that are not public business entities would be January 1, 2021, which is a one-year extension.
- Long-duration insurance contracts: The new effective dates would be January 1, 2022 for calendar-year-end public business entities and January 1, 2024, for all other calendar-year-end entities.
This is certainly welcome news for the vast majority of our clients and prospects. If you have any questions, please don’t hesitate to contact any of our Financial Institution professionals at CLA.
Neil is a principal in our banking practice. He has more than 25 years of experience in the banking industry, which includes nine years in the private sector. His private industry experiences range from cashier to chief financial officer; however, his strengths are in both the operations and lending areas of community banks. Neil has led some of the firm’s largest bank external and internal audit and FDICIA engagements. Neil also assists clients with other projects such as merger and acquisition transactions and capital planning.
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