With the influx of new accounting standards over the past couple of years, the burdens added to smaller accounting departments seem to be continuously mounting. Add in the COVID-19 pandemic, and now accounting departments and business owners are burdened with how to keep businesses afloat when collections take longer to come in, vendors requesting payment faster, while some employees worry if they will still have a job tomorrow.
One positive is that some of the new accounting standards poised to take effect soon may see delays of another year. One of the most substantial overhauls to accounting standards, only second to the recent revenue recognition changes, is the lease accounting standard, and yes—it is on the list of potentially delayed standards in response to COVID-19.
The Financial Accounting Standards Board (FASB) met recently and added a project to their agenda for considering delaying the effective date of ASC Topic 842, Leases, for private companies. The leasing standard, which currently has an effective date for fiscal years beginning after December 15, 2020, would be delayed for one year with a proposed new effective date for fiscal years beginning after December 15, 2021.
This delay would be a welcome relief for contractors, especially those who rely heavily on equipment leasing to operate their businesses. If passed, these delays would allow contractors to focus on current business and economic issues, as well as COVID-19 federal government stimulus relief, taking one administrative burden off otherwise overwhelmed accounting departments. FASB currently has an expected completion date within the second quarter of 2020 to release the exposure draft for a 15-day comment period, so we should know soon when this delay will be official.
In the Meantime…
CRI’s advisors can help navigate the ins and outs relating to the COVID-19 pandemic, from assisting you with selecting the best relief option for your organization, to helping you plan for business resumption. The CRI website also hosts a wealth of COVID-19 materials, from articles and charts, to podcasts and webcasts in the COVID-19 Resources center. We encourage you to explore these resources and reach out to your CRI professional as questions arise.