The effective date of FASB’s standard on accounting for leases will be delayed for private companies and certain other entities after a unanimous vote Wednesday by FASB.
FASB directed its staff to draft an Accounting Standards Update (ASU) that will change the effective date and be issued following a formal written ballot by the board, which is expected to take place in November. Under the ASU, the effective date is delayed one year to fiscal years beginning after Dec. 15, 2020.
Early-adoption options for the lease standard will remain unchanged.
FASB members said during a board meeting that one of the advantages of the delay is that it will allow preparers with limited resources to learn from the implementation performed by large public companies that possess more staffing and resources.
“It is quite clear that private companies have the ability to learn from what others have done,” FASB Chairman Russell Golden said. “I think it’s good that we’re going to allow smaller reporting companies to also have that advantage. I think having additional time to get through at least one annual audit cycle and regulatory cycle will help have an increased quality implementation by smaller reporting companies and private companies.”