FASB mulls pushing back accounting standards deadlines in response to coronavirus

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The Financial Accounting Standards Board will be meeting next week to discuss the impact of the novel coronavirus pandemic on its stakeholders, including pushing back the effective dates of some of its upcoming accounting standards.

Last year, FASB voted to defer the effective dates of several standards, including the ones leases, hedging, credit losses and long-duration insurance to give companies more time to adjust to them after the revenue recognition standard (see our story).

The $2.2 trillion stimulus package passed by Congress last week, the CARES Act, also includes a provision allowing banks the temporary option to delay compliance with the credit losses standard, also known as CECL because of the Current Expected Credit Loss model it follows (see our story). Last week, a group of federal banking agencies, including the Federal Reserve, the Federal Deposit Insurance Corporation, the Treasury, and the Office of the Comptroller of the Currency also issued an interim final rule allowing banks to mitigate the effects of the CECL standard in their regulatory capital. Banking organizations that are required to adopt CECL this year can mitigate the estimated cumulative regulatory capital effects for up to two years, in addition to the three-year transition period already in place.

The COVID-19 pandemic is putting more pressure on FASB to push back the effective dates of its other standards given the far-reaching impact of the pandemic on the economy. FASB said Wednesday it is monitoring and responding to the situation and is committed to supporting and assisting our stakeholders during this difficult time.

At its meeting on April 8, FASB intends to discuss plans to support stakeholders as they navigate the impact of the pandemic. The discussion will include responses to pervasive questions on urgent accounting issues. That is likely to include discussions around the use of fair value measurement and mark-to-market accounting, given the volatility in the capital markets lately.

On the matter of agenda requests for deferral of standards, FASB plans to discuss effective date deferral requests for significant standards that have not yet taken effect. FASB will also discuss the potential impact of the COVID-19 pandemic on its current project deliberations and standard setting. The board members will also discuss the sunset date for reference rate reform as banks move away from LIBOR, the London Interbank Offered Rate, to other benchmark rates that are less prone to market manipulation.

FASB said it will help its stakeholders interpret the guidance related to priority issues, including troubled debt restructurings and lease modifications. FASB noted that it is continuing to work in close collaboration with the Securities and Exchange Commission staff, the American Institute of CPAs, banking regulators and other stakeholders.

It’s encouraging its constituents to connect with the board through its website. For technical inquiries, questions should be submitted directly to FASB staff about standard implementation or other issues.

FASB also offers an implementation web portal that provides a “one-stop shop” of educational resources on major standards, including leases, credit losses, insurance and reference rate reform. To submit other comments, questions and inquiries visit www.fasb.org/contact.

Information on how to view the April 8 meeting will be announced shortly on www.fasb.org.

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