FASB has Formally Announced an Adoption Delay for Private Companies
On October 16, 2019, the Financial Accounting Standards Board (FASB) formally affirmed they would give private companies and not-for-profits who are not conduit bond obligors an extension of the deadline for the adoption of the ASC 842 standard.
This comes after the July 2019 affirmative vote to extend the deadline. The reasoning behind the delay was the overwhelming evidence that many public companies struggled with gaining compliance within their deadline, which was for fiscal years beginning after December 15, 2018. The new deadline for private companies to gain compliance is for fiscal years beginning after December 15, 2020, rather than 2019 (year-end only reporting) and interim periods with fiscal years beginning after December 15, 2021. Overall, the delay is for one (1) year, although early adoption is still allowed.
As discussed previously, FASB will be giving private and not-for-profit companies much-needed relief from the upcoming deadlines due to the struggles of public companies to become compliant for their deadlines in 2018. Firms just beginning their compliance journey will significantly benefit from this extension. Organizations should be utilizing the extended timeline to create an adequate adoption plan, staff projects correctly and make a rational software selection and adopt as seamless as possible.
Private companies and not-for-profits who have already started and are considering taking advantage of this newfound window of opportunity should stay the course and maintain the project with the most efficient timeline possible. Or perhaps even slow down as needed and re-write adoption plans as necessary, but do not stop.
However, 30% of companies who have yet to begin ASC 842 adoption gain the most from this delay. This is the time to take advantage of a possible extension and bring your organization up to speed and into compliance. Take the first step in getting compliant. Schedule a call with one of our ASC 842 experts to find out how to get started.