By Denise Lugo
The FASB plans to hold two lease accounting roundtables on September 18, 2020, virtually – a historic first for the board in terms of format for a panel debate.
“The roundtable discussion will give us the chance to hear from stakeholders about their varied experiences implementing the leases standard, which is an important part of the FASB’s post-implementation review process,” FASB Chair Richard Jones said in a statement. “Their feedback will help us improve how we support ongoing leases implementation for all stakeholders, as well as identify any issues we may need to address.”
It is the board’s third attempt to hold the roundtable after having to cancel it in April and subsequently in May over COVID-19, the respiratory disease brought on by a new coronavirus strain.
The FASB will hold separate morning and afternoon panel discussions to focus on broad technical issues that companies and organizations have found challenging when applying the leases standard, according to a July 23 board announcement. Roundtable participants will include financial statement users, preparers, auditors, and representatives from certain types of industries.
The format change stems from work-from-home mandates still in place due to COVID-19. Though restrictions have been lifting nationwide, states differ in relation to the level of containment.
Attendees can access the discussions live on the board’s website, the board said. No pre-registration is required.
At its July 15 meeting, the board signalled it would hold a roundtable mid-September, but did not specify a date or format. Typically, roundtables are held in person at the FASB’s Norwalk, Connecticut headquarters. (See FASB Sets Leases Roundtable for Mid-September in the July 16, 2020, edition of Accounting & Compliance Alert.)
Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), requires companies to report, for the first time, the full magnitude of their long-term lease obligations on the balance sheet. It is one of three standards under post-implementation review (PIR) by the board, its process to examine a new standard to determine whether it worked as intended. Revenue recognition and credit loss rules are also under PIR.
Public companies adopted the leases standard in 2019, and it was to take effect a year later for private companies but was delayed in November. In early June this year, the standard was again delayed for one year because of the coronavirus crisis.
The rules are now effective for fiscal years beginning after December 15, 2019 for not-for-profit bond obligors that have not issued statements. For private companies it is effective for fiscal years beginning after December 15, 2021.
Financial statement preparers from public companies have said that the leases standard requires big systems changes for some companies. The work can be substantial depending on the number of leases a company carries, because software programs have to be tailored.
There has been speculation that more company leases might be revised, brought on by the work at home mandates they had to put in place to help stem the spread of COVID-19. Some companies are hoping the board’s roundtable will bring cost saving rule amendments, practitioners have said.
For in-depth analysis of the FASB’s standard for lease accounting, please see Catalyst: US GAAP — Leases , available on Checkpoint.
Additional analysis of the lease standard can be found in the Accounting and Auditing Update Service [AAUS] No. 2016-15 and SEC Accounting and Reporting Update Service [SARU] No. 2016-13 (March 2016): Special Report: Accounting for Leases—an Explanation and Analysis of Accounting Standards Update No. 2016-02.