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    FASB Proposes to Extend CECL Standard Deadline for Certain Entities

    August 15, 2019

    FASB proposed an Accounting Standards Update that would grant private companies, not-for-profit organizations, and certain small public companies additional time to implement FASB standards on current expected credit losses (CECL), leases, and hedging. The proposed update covers Topic 326 on measurement of credit losses for financial instruments, Topic 815 on derivatives and hedging, and Topic 842 on accounting for leases. The proposed new implementation date for "private and all other entities" is January 2023 for the CECL standard and January 2021 for the hedging and leases standards. Stakeholders are encouraged to review and comment on the proposed Accounting Standards Update by September 16, 2019. The provisions in the proposed update would be effective as soon as it is issued as a final Accounting Standards Update and the Board plans to issue the final update before December 31, 2019.

    The proposed update describes a new FASB philosophy that extends and simplifies how effective dates for major standards are staggered between larger public companies (bucket one) and all other entities (bucket two). The other entities include private companies, smaller public companies, not-for-profit organizations, and employee benefit plans. Under this philosophy, a major standard would first be effective for larger public companies. These entities would consist of U.S. SEC filers as defined in the FASB Accounting Standards Codification® Master Glossary, excluding those that are eligible to be smaller reporting companies (SRCs) under the definition of SEC. Under the SEC definition, investment companies (including business development companies), asset-backed issuers, and majority-owned subsidiaries of a parent company that is not an SRC are not eligible for SRC status. For all other entities, the Board would consider requiring an effective date staggered at least two years later. Nevertheless, it is expected that early application would continue to be permitted for all entities. FASB Chair Russell G. Golden believes that "this represents an important shift in the FASB’s philosophy around effective dates, one we believe will support better overall implementation of these standards.”

     

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    Keywords: Americas, US, Banking, Accounting, CECL, Leases, Hedging, Topic 326, Topic 815, Topic 842, Implementation Timeline, IFRS 9, IFRS 16, FASB

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