So Many Standards, So Little Time
Jennifer French CPA, Principal
For your New Year’s resolution of staying on top of the new accounting and auditing standards, I wanted to share a timeline of the various new standards and their respective effective dates so you can pencil them in on your calendar.
Everyone breathed a sigh of relief when Statements on Auditing Standards No. 141 was issued in May of 2020, as it delayed the effective dates of several standards from December 15, 2020 to December 15, 2021. As a result, we are now playing “catch up” due to the influx of standards that need to be evaluated and implemented as well as upcoming standards to be tracked.
For calendar year 2021, the following Accounting Standards Updates (“ASU”) are effective. So if your December 31, 2021 audit is underway, keep these in mind.
- ASU 2020-04, Reference Rate Reform (Topic 848). This standard was issued in response to the planned discontinuation of major interbank reference rates, including the London Interbank Offered Rate, otherwise known as LIBOR.
- ASU 2021-01, Reference Rate Reform (Topic 848): Scope. This standard was issued in response to ASU 2020-04 to clarify certain optional expedients and exceptions, such as derivatives and hedging activities.
- ASU2021-02, Franchisors – Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient. This standard introduces a new practical expedient for franchisors that are not public business entities and how to account for pre-opening services.
The below Statements of Auditing Standards (“SAS”) are effective for 2021. As a result of these standards, there are significant changes to the engagement letters and independent auditor reports.
- SAS No. 134, Auditor Reporting and Amendments
- SAS No. 135, Omnibus – Certain Changes to Conform to PCAOB Standards
- SAS No. 136, Auditor Reporting on Employee Benefit Plans
- SAS No 137, Other Information Included in Annual Reports
- SAS No. 138, Amendments to the Description of Materiality
- SAS No. 139, Amendments to AU-C800, 805, 810 for Auditor Reporting Changes
- SAS No. 140, Amendments to AU-C725, 730, 935 and 940 for Auditor Reporting Changes Amendments to AU-C930
Following are the standards effective over the next few years. Be sure to review them to see which ones will need to be addressed for your company or organization.
Effective for 2022 calendar years:
- ASU 2016-02, Leases (Topic 842)
- ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842)
- ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes
- ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323) and Derivatives and Hedging (Topic 815)
- ASU 2020-08, Codification Improvements to Subtopic 310-20 Receivables – Nonrefundable Fees and Other Costs
- ASU 2020-10, Codification Improvements
- ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)
- ASU 2021-05, Leases (Topic 842) Lessors – Certain Leases with Variable Lease Payments
- ASU 2021-07, Compensation – Stock Compensation (Topic 718)
- ASU 2021-09, Leases (Topic 842), Discount Rate for Leases that are not Public Business Entities
- ASU 2021-10, Government Assistance, Disclosure by Entities about Government Assistance
Effective for 2023 calendar years:
- ASU No. 2020-03, Codification Improvements to Financial Instruments
- ASU No. 2020-07, Not-for-Profit Entities, Presentation and Disclosure for Contributed Nonfinancial Assets
Effective for 2024 calendar years:
- ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s One Equity (Subtopic 815-40)
- ASU No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
Effective for 2025 calendar year:
- ASU No. 2020-11, Financial Services – Insurance (Topic 944)
Hopefully, this timeline will come in handy for your company’s planning meetings, forecasting and budgeting purposes, and meetings with auditors and accountants. As new standards come effective, I will publish an updated list in a future article. Let me know if this is helpful or if a different format is preferred. As always, let us know if there is a standard you would like to discuss or would like assistance with implementing.