FASB VOTES TO PROCEED WITH FINAL STANDARD ON LEASES
Final Accounting Standards Update to be published in early 2016;
Effective in 2019 for public companies and 2020 for private companies
Norwalk, CT, November 11, 2015—The Financial Accounting Standards Board (FASB)
today voted to proceed with a new accounting standard that would
require companies and other organizations to include lease obligations
on their balance sheets. The final Accounting Standards Update (ASU) is
expected to be published in early 2016.
The Board decided that for public companies, the upcoming standard will
be effective for fiscal years (and interim periods within those fiscal
years) beginning after December 15, 2018; for private companies, the
standard will be effective for annual periods beginning after December
15, 2019. Early adoption will be permitted for all companies and
organizations upon issuance of the standard.
As a next step, the FASB staff will complete a "ballot draft" of the ASU
that includes all of the Board´s final decisions. The ballot draft
will be shared with each of the seven Board members, who will review it
to ensure that it accurately reflects decisions made throughout their
public deliberations. When the Board is satisfied that the ballot draft
reflects its intentions, the draft will be submitted to production for
"We believe that this new standard is important because it will provide
investors, lenders and other users of financial statements a more
accurate picture of the long-term financial obligations of the companies
to which they provide capital," said FASB Chairman Russell G. Golden.
The leases project
was added to the FASB´s joint agenda with the International Accounting
Standards Board (IASB) in response to concerns from investors, other
financial statement users, and the U.S. Securities and Exchange
Commission (SEC) regarding the lack of transparency relating to material
lease obligations that have been reported off-balance sheet. The SEC
staff in 2005 identified leasing as a form of off-balance sheet accounting that should be addressed by the FASB.
The decision to issue the final standard followed extensive stakeholder
outreach. The FASB received more than 1,740 comment letters on a 2009
Discussion Paper and two Exposure Drafts (2010 and 2013). During this
process, the FASB participated in more than 200 meetings with financial
statement preparers and users, hosted 15 public roundtables, 15 preparer
workshops, and 14 meetings with practitioners, standard setters, and
other interested parties. In addition, the FASB and the IASB met with
more than 500 users of financial statements.
It is expected that the final standard will be published in early 2016,
giving preparers enough time to review and prepare for the changes by
the effective dates.
More information about the upcoming Leases ASU is available at www.fasb.org.