July 19, 2019
FASB Votes to Propose Deferral of Lease Accounting Compliance
Posted by Justin Wecker
On Wednesday, July 17, 2019, FASB proposed delaying the effective dates for four key standards, including extending the lease accounting deadline for private companies and nonprofits to January 1, 2021.
There is a 30-day public comment period, but it is highly likely that these proposed delays will pass. Here’s what it means for lease accounting compliance for public and private companies.
This change does not impact public company compliance since the new standard became effective for publics on Jan. 1, 2019. Nevertheless, we understand that many public companies have struggled with the burden that this standard has put on their finance teams, which is the most significant contributing factor to the proposed delays for privates.
According to Bloomberg, “businesses have yet to develop routine practices for consistently applying the standard.” Public companies are now struggling with second quarter financial reporting and efforts to standardize their processes. Armanino can support and serve as an extension of your team as you review the people, processes and technology responsible for managing leases and communicate with your auditors.
Private Companies and Nonprofits
The lease accounting deadline extension is providing the opportunity for private companies and nonprofits more time to get their lease accounting in order.
There are several benefits to taking a proactive approach to ASC 842, including reduced anxiety and the opportunity to systematically improve your approach to your financial reporting processes.
Consider starting with a lease accounting gap assessment and roadmap exercise to properly strategize and prepare for financial impacts and how to adequately operationalize the new standard for both adoption and post adoption. A thorough gap assessment and roadmap will stage you to avoid costly delays and rework. We recommend that you start now.
Justin provides business advisory services to a broad range of clients. With more than 18 years of Big Four and private equity experience, he has a deep technical accounting background combined with strategic expertise. He is a member of the American Institute of Certified Public Accountants and has a B.S. in accounting from Colorado State University.