Why postponing the implementation of FASB may not be a good idea


FASB has replaced a nearly 40 year old ASC 840 standards and so the changes required to be implemented are definitely not inconsequential. With the aim of covering some major accounting gaps, the new standards came into force for public companies as of December 15, 2018. Private companies will follow on December 15, 2019. It’s March, so private companies have very little time left to implement the new accounting standards. Companies who have already started the implementation process have realized that compliance and implementation are more challenging than expected.

Here are some of the reasons why implementation cannot be delayed

  1. Companies need to analyze, identify and apply their lease obligations. Apart from the existing lease data, a significant number of additional data needs to be captured. The time required for implementation will vary depending on the availability of resources and the accessibility to the required data. Another challenge is the transfer of lease data from an excel sheet or current system to an upgraded centralized system. This also means companies need to be prepared to spend more on upgrading the existing accounting system.
  2. With limited time and stretched budgets, companies might be tempted to exclude or delay some critical tasks which can attract fines or late fees. Non-compliance and inaction can also lead to financial penalties.
  3. Effects of non-compliance with the new accounting standards is not limited to the process or people within a company. A company which delays the implementation will also have to deal with lost customers and investors. So companies not only end up adding to their expenditure but also have to watch their income dwindle.

As a company who has helped many organizations meet their FASB requirements, RE BackOffice recommends that companies should act fast to understand and implement the new accounting standards.