In response to the widespread disruption caused by COVID-19, the Financial Accounting Standards Board (FASB) announced in their Board meeting on April 8, 2020, a proposal for delays in the following accounting standards for certain entities:
- Revenue from Contracts with Customers (Topic 606): the effective date for this standard, including subsequent amendments, for franchisors that are not public business entities, is proposed to be extended to annual reporting periods beginning after December 15, 2019;
- Leases (Topic 842): the effective date for this standard for private companies and private not-for-profit entities is proposed to be extended to annual reporting periods beginning after December 15, 2021. For public not-for-profits, the proposal suggests an effective date to fiscal years beginning after Dec. 15, 2019. The deferral is seen as a welcome relief for hospital and universities as they cope with the fallout from COVID-19.
At this point, the FASB Board has provided a 15-day comment period for this proposed update to these standards, following which the FASB staff will draft the Accounting Standards Update that will then be voted on by written ballot.
For more information on this proposal, see the April 8, 2020 FASB Tentative Board Decisions.
Another welcome piece of news for auditors came in the form of a proposal from the Auditing Standards Board (ASB) to defer seven Statements on Auditing Standards (SASs) No. 134 through 140, by one year, i.e. for audits of financial statements for periods ending on or after Dec. 15, 2021. Since these new SASs will significantly modify the current form and structure of the auditor’s report, the ASB believes this delay will allow the much-needed additional time and resources required for implementation of these standards. The proposal seeks to now allow early adoption.
The ASB has scheduled a special open meeting on April 20, 2020, to discuss this proposal. This meeting is open to the public and the ASB meeting observer registration can be completed at, ASB Meeting Observer Registration.
Updated as of 4/21/20 – On April 20, 2020, the American Institute of CPAs’ Auditing Standards Board announced delayed effective dates of SASs No. 134–140. The standards now will take effect for audits of financial statements for periods ending on or after Dec. 15, 2021 with early implementation permitted.