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Proposed Deferral of Lease Standards Due to COVID-19 Business Interruptions

Jennifer Casacchia

Apr 23 2020

2 min read

On April 8, 2020, the Financial Accounting Standards Board (FASB) proposed the deferral of Accounting Standards Update No. 2016-02, Leases (Topic 842), and subsequent amendments, commonly known as the lease standards, for certain entities. This was decided as a result of global concerns related to the COVID-19 pandemic.

The Lease Standards Effective Date

The FASB is proposing to postpone the effective date by one year for private not-for-profit organizations and private companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Currently, nonpublic entities are required to comply with annual reporting periods beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021.

This deferral would also apply to not-for-profit organizations that have issued or are conduit bond obligors for securities traded, listed and quoted on an exchange or over-the-counter market that haven’t yet issued financial statements, according to the proposal released by the FASB. The deferral would move the effective date to fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

Not-for-profit entities could still adopt the lease standards early.

15-Day Comment Period

The FASB included a 15-day comment period in their proposal for organizations to note challenges in adopting this standard during the Coronavirus pandemic.

Topic 842, Leases, was previously delayed in July of 2019 due to companies’ challenges understanding the standard and adopting it.

Speak with a Professional

We encourage not-for-profit organizations to take this time to prioritize their business and get a better understanding of the new standard. For help navigating the current business climate as a result of COVID-19, please contact your Sikich representative.

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About the Author

Jennifer Casacchia

Jennifer Casacchia, CPA, is a director on the firm’s not-for-profit (NFP) and higher education practices team. She has more than 15 years of experience working extensively with NFP and higher education organizations and has more than 12 years of experience in public accounting with direct experience in the audits of NFP organizations, including those that receive federal funds.