FASB Offering Relief to Private Companies in the Midst of COVID-19 Disruption, V2

FASB voted on Wednesday, May 20 to expand a franchisor-specific proposal to delay the effective date of the new revenue recognition to additional entities, including nonpublic and public not-for-profit entities that have not yet issued financial statements in which the adoption would have otherwise been reflected.

The standard is currently effective for calendar year-end private companies in their 2019 annual financial statements. Many private companies have already issued their first annual financial statements post-adoption. Others are in various stages of implementation efforts. The proposal is primarily in response to feedback the FASB received regarding the effects of the COVID-19 pandemic. Companies potentially affected by the relief immediately have the opportunity to reassess the best use of resources during a time of unprecedented business disruption and take advantage of delayed mandatory adoption dates.

In addition to project resources and entity-specific readiness to operationalize policy changes as a result of adoption, companies should also consider factors such as historical and anticipated changes in operations and / or contracting practices; the effect that delayed implementation might have on exit strategies and financing; impacts of a the lack of comparability with other companies not subject to the relief; anticipated resource constraints due to future expected projects including the adoption of the upcoming leases standard; and other factors relevant to the entity.