Survey Shows Doubts over Implementation of Lease Standard
A Big Four accounting firm survey released last week revealed that company executives are doubtful over the implementation of the Financial Accounting Standards Board’s (“FASB”) lease accounting standard. Nearly half of companies surveyed (47.1 percent) are concerned about applying the guidance under Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), before the 2019 effective date.
James Barker, a senior consultation partner for lease accounting for the Big Four firm, noted that companies are working feverishly on implementing the lease accounting guidance. Companies, however, are focusing on implementing the guidance for ASU No. 2014-09, Revenue From Contracts With Customers. The reason for prioritizing the FASB’s revenue standard is because the guidance must be followed ahead of the leases standard.
Over half of consumer products, retailers, wholesale and distribution businesses surveyed are concerned about the lease standard’s effective date. More importantly, companies from the oil and gas sector had the biggest concerns over implementing the new guidance. About 56.2 percent of the sector’s corporate leaders are worried about implementation.
In a July 11 letter to the FASB, the American Petroleum Institute asked the board to postpone the lease standard by two years. The FASB has yet to commit to honoring the trade group’s request.