By: William Bauder, CPA, CGMA, CITP- Manager of Assurance & Advisory Services
Our firm has been keeping you updated on the most recent events surrounding tax reform, but, taxes aren’t the only things changing these days. The accounting standards are also changing, and more frequently and more drastically than in recent history. From 2014 to 2017 there were 70 separate Accounting Standards Updates (ASU’s) implemented. In three year period preceding, 2011-2013, there were only 33 ASU’s implemented. There are more coming too. In 2017 the FASB put out 14 standards for comment. During 2015 and 2016 only a combined 10 standards were put out for comment. Currently, the FASB has 29 separate projects in some phase of exploration. The changes are going to keep coming. Make sure you are staying up to date and working closely with your accounting professionals.
Below are some of the larger standards on the horizon:
New Revenue Recognition Standards:
- ASU 2014-09 (ASU 2015-14 delays implementation by 1 year)
- This goes into effect for fiscal years beginning after 12/15/18 for all non-public entities.
- It is important to note, this standard will affect all industries; all those who follow GAAP accounting standards will be affected by this.
New Not-For-Profit Standards:
- ASU 2016-14 brings about the largest change to NFP accounting in 25 years.
- This standard goes into effect for fiscal years beginning after 12/15/17.
- These new standards change the three classes of net assets to two. Increased disclosure on liquidity. A statement of functional expenses must be presented. New standards may also present a direct method cash flow without also doing an indirect cash flow.
New Lease Standards:
- ASU 2016-02 goes into effect for fiscal years beginning after 12/15/19 for non-public companies.
- As an extreme generalization: any lease the entity has will now be treated as a capital lease- meaning there should be an asset and liability on the books.
Income Taxes Disclosure:
- ASU 2015-17 goes into effect for fiscal years beginning after 12/15/17 for non-public companies.
- In the case of this change, a breakout of deferred tax assets/liabilities between current and long term will no longer be required.
Standards to look for this year:
- Keep an eye on ASU 2015-11 – this one relates to inventory. This one goes into effect for fiscal years beginning after 12/15/16 and means that inventory should be valued at the lower cost or net realizable value (no longer at lower of cost or market).
Again, these were just a few of the standards that have changed, are scheduled to change, or the FASB is looking into changing in the coming years. If you have questions about these or any other accounting matters, feel free to give our firm a call or send me an email. Thanks and good luck navigating these changes!