Privately-held companies (and those who rely on those companies’ financial statements) will likely get a one-year deferral on the planned implementation timing of the new lease accounting rules. Just yesterday, the Financial Accounting Standards Board (FASB) voted unanimously to delay required implementation by one year; however, the process for this decision to ultimately become GAAP (Generally Accepted Accounting Principles in the U.S.) is not quite complete. The next step is for the FASB to issue an exposure draft, consider any comments, redeliberate, and issue a final standard update.

If finalized as planned, the new effective date for ASC 842 will be for calendar year 2021, for private companies.

The FASB also voted to delay implementation (by one year) of its recently-issued amendments to the following standards for private companies:

• ASC 326 – Financial Instruments – Credit Losses
• ASC 815 – Derivatives and Hedging
• ASC 944 – Financial Services – Insurance

Although the FASB may delay the implementation of the new lease accounting requirements, we strongly recommend that companies continue (or start!) their implementation efforts. There is significant planning that can be done now. For example, companies should locate all of their agreements and make them available for review. Locating these agreements may prove more challenging for companies that have decentralized operations, or have grown through acquisition.

If you would like more information on this guidance, please reach out to Matt Wright or Dave Porter. We will be following this very closely.