The Financial Accounting Standards Board issued a proposed Accounting Standards Update, or ASU, that would grant private companies, not-for-profit organizations, and SEC registrants classified as smaller reporting companies additional time to implement FASB standards. For smaller reporting companies this would include the standard on current expected credit losses (CECL), and for private companies it would include CECL and standards on leases and hedging.
Smaller reporting companies would have to implement CECL by January 2023.
The proposed ASU describes a new FASB philosophy that extends and simplifies how effective dates for major standards are staggered between larger public companies and all other entities. Those other entities include private companies, smaller public companies, not-for-profit organizations, and employee benefit plans. Under this philosophy, a major standard would first be effective for larger public companies. For all other entities, the Board would consider requiring an effective date staggered at least two years later. Generally, it is expected that early application would continue to be permitted for all entities.
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