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Standard setters propose deferrals on accounting rules amid COVID-19 pandemic

Apr 27, 2020

The Financial Accounting Standards Board (FASB) has recognized the difficulties that smaller companies are having and may continue to have in the near future due to the impact of the COVID-19 coronavirus.

As such, the FASB proposed on April 21, 2020, to provide one-year deferrals on revenue and lease accounting rules for certain entities. The proposal, called Accounting Standards Update No. 2020-300, will grant franchisors more time to adopt revenue rules and defer the leases standard for private companies and not-for-profit organizations.

The proposed effective date deferral for revenue recognition would be limited to private company franchisors. Those entities would have the option to apply the new standard for periods beginning after December 15, 2019.

The delay in the effective date of the lease standard would allow private companies and private not-for-profits to have the option to apply the new standard for fiscal years beginning after December 15, 2021.

“The FASB’s proposal to delay time-sensitive standards would provide a measure of relief to certain companies and organizations focused on the COVID-19 crisis,” FASB Chairman Russell Golden said in a news release. “It’s the first in a series of steps the board is taking to ensure our stakeholders can successfully implement GAAP guidance during this time.”

Additionally, the AICPA’s Auditing Standards Board (ASB) voted on April 20, 2020, to defer the effective date of certain audit standards by one year amid the COVID-19 crisis. The deferral will give companies and auditors the option to delay the implementation of the revamped auditor’s report originally set to take effect for entities with annual reporting periods ending after December 15, 2020.

To read more about the changes to your auditor’s report, see Wipfli’s article from last fall on the topic. 

Other standard-setting bodies have also enacted similar delays. The Government Accounting Standards Board (GASB) issued an exposure draft on April 15, 2020, that would postpone nine upcoming standards and five implementation guides by one year.

Please note that the above proposals are all subject to change pending the issuance of final standards.

With effective dates and deadlines changing by the day, it is important to reach out to your Wipfli representative as soon as you have questions. You can also visit our COVID-19 resource center, where you can find more resources to help navigate the impact of the coronavirus.

Author(s)

Jordan_Steve
Steven A. Jordan, CPA
Senior Manager
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