FASB Proposes Lease Standard Delay, Issues Pandemic Concessions FAQs

The Financial Accounting Standards Board (FASB) on April 8, 2020 issued a proposal to defer the effective date for ASU 2016-02, Leases, and all subsequent amendments by one year in response to the ongoing coronavirus pandemic.

For private companies and private nonprofits, the effective date would be for fiscal years beginning after December 15, 2021. For public nonprofits (those who are conduit bond obligors for public debt), the effective date would be for fiscal years beginning after December 15, 2019 provided the entity has not issued financial statements.

There is a 15-day comment period after which this proposal is expected to be adopted.

Lease Accounting Guidance for Lease Concessions

Also on April 10, 2020, FASB staff issued a question-and-answer document to address questions on the application of the lease accounting guidance for lease concessions related to the effects of the coronavirus pandemic. Many lessors are or may be asked to provide lease concessions due to the economic disruptions caused by the pandemic. This Q&A is intended to respond to some of the FAQs to help stakeholders navigate the guidance in this area. For lease concessions related to the effects of the pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842, Leases (or Topic 840, Leases) to those contracts.

AAFCPAs with keep you updated on further developments.

If you have any questions please contact: Hui-Ting Grady, CPA at 774.512.4106, hgrady@nullaafcpa.comMatt Hutt, CPA, CGMA at 774.512.4043, mhutt@nullaafcpa.com; or your AAFCPAs Partner.

About the Authors

Hui-Ting Grady
Hui-Ting has extensive experience providing assurance solutions to diverse nonprofit organizations, including: affordable housing development projects with HUD requirements, multi-service human & social services providers, and behavioral health agencies. She delivers audits in accordance with Uniform Guidance/Single Audit and Government Auditing Standards, as well as Uniform Financial Report (UFR) and other funding source regulations. Hui-Ting is a member of AAF’s Accounting and Assurance (A&A) Committee, and Revenue Recognition Task Force. She is dedicated to keeping the firm and clients apprised of regulatory changes and new pronouncements in a proactive and timely manner, as well as providing best practice recommendations for efficient and effective implementations of new accounting standards.
Matthew Hutt CPA
Matt leads AAFCPAs’ Healthcare Division, providing assurance, tax and advisory solutions for Federally Qualified Health Centers (FQHCs), behavioral health providers, home care agencies and hospices, nursing homes, and senior care living centers. Matt advises healthcare providers on consolidation and coordination of care, including the integration of behavioral health into the primary care delivery system. He also provides consulting solutions for providers transitioning to new value-based reimbursement models, and data driven patient care, including: developing business process and controls for collecting and advantaging data to provide analysis on: provider activity, delivery of care, and analysis of efficiency & cost effectiveness. Matt is also highly-sought after for his knowledge on issues related to affordable housing developers with requirements related to the US Department of Housing and Urban Development, MassHousing, Low Income Housing Tax Credits, Historical Tax Credits and New Markets Tax Credits.