FASB has voted to extend the effective dates for certain preparers for its new standards for accounting for leases, credit losses (known as CECL), and hedging. Here's how to make the best use of the extra time.
Editor's note: For details on the new effective dates of the updated standards, see "News Digest: FASB Votes to Delay Effective Dates for 3 Major Standards, "page 9.
Educate internal and external stakeholders. The delay provides more time to communicate the effects the standards will have on a company. Internal groups to be educated include the board, senior management, internal audit, IT, and operational departments that will supply data to support the new accounting. Externally, shareholders and analysts will need to know the standards' effects. "Analysts are already asking about CECL," said Raj Mehra, executive vice president and CFO of Freedom Bank of Virginia. "Although a few publicly traded banks may be providing voluntary disclosures, there could be a trickledown effect from analysts, and publicly traded banks may find it helpful to provide additional disclosures."
Review filings by SEC registrants.
One reason FASB cited for delaying the standards was to create an opportunity for private companies and others to review filings by large public companies with substantial accounting resources. "It behooves all companies to review filings and disclosures of registrants," Mehra said.
Invest time in lease software consideration. If your company plans to purchase a system to manage lease accounting under the new standard, the extra time is doubly helpful. First, software vendors will have more time to build better systems. "They now have more time to review the functionality, add features, and offer a more complete product," said Jessica Everage, CPA, senior manager, Audit Professional Practices at Cherry Bekaert LLP. Meanwhile, preparers no longer should feel rushed to choose a system for their lease accounting. "Companies will have more time to choose the best software...