SEC Gives Certain Companies Additional Year to Adopt Key FASB Standards
July 27, 2017
Securities and Exchange Commission (“SEC”) Deputy Chief Accountant Sagar Teotia has announced that companies that fail to meet the public business entity definition, separate from being required to include financial statements with their filings of public business entities, will receive an additional year to adopt the Financial Accounting Standards Board’s (“FASB”) revenue recognition and lease standards.
Decided at the FASB’s Emerging Issues Task Force meeting last week, Teotia said his staff will not object to the affected companies complying with Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers (Topic 606), and ASU No. 2016-02, Leases (Topic 842), when private companies and other qualifying entities are required to comply. He also said these businesses have the option of adopting the standards at the same time as other public companies.
The FASB’s landmark revenue recognition standard will be effective for public companies next year; private companies must adopt it for annual reports in 2019, and 2020 for quarterly reports. The leases standard goes into effect for public companies in 2019; all other entities must adopt the changes to annual reports in 2020, and 2021 for quarterly reports.