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FASB Chair Says No to Delaying Lease Standard Implementation

Chris Gaetano
Published Date:
Dec 14, 2018

Russell Golden, the chair of the Financial Accounting Standards Board (FASB), said that  there are no plans to delay the effective date of the new lease standards, despite the struggles companies have faced in preparing for implementation, according to Compliance Week

The new lease standards are set to become effective at the beginning of 2019. The new rules will require that companies account for leases on the balance sheet, with the lease cost listed as an expense that is counterbalanced by an asset representing the right to use the leased property.

At the Foundation for Accounting Education's annual Broker-Dealer Conference on May 9, Charles V. Abraham, the financial services practice leader at Mazars USA, discussed the intricacies of the standard. In August, FASB released proposed guidance aimed primarily at lessors, intended to make implementing the new lease standard easier and less expensive.

Since the new standards were approved in 2015, companies have consistently struggled with the challenges that would come with implementation. A 2016 survey found that only 13 percent of companies had a clear plan for implementation. Things only got slightly better in 2017, as a Deloitte poll found that 47.1 percent of C-suite and other corporate executives are concerned about their ability to implement them on time. As of this past November, just 4 percent of companies report that they are ready for the new standards, with 80 percent in the middle of implementation work. 

This all has led stakeholders to ask the FASB to possibly delay the effective date. Golden, however, said that he is confident that the system is ready to implement these new standards and to do so well. Therefore, there are no plans to delay. 

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