The IMA Small Business Committee (SBC or Committee) issued a comment letter in response to the Financial Accounting Standards Board’s Proposed Accounting Standards Update (ASU) No. 2020-300, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities. The proposed amendments, if adopted, would delay the effective date of new standards as follows:
- Revenue recognition, as it applies to private franchisors
- Leases, as it applies to private entities
The FASB is allowing for the delay so that businesses can respond to the effects of the COVID-19 pandemic.
In its response, the SBC supports the proposal. The Committee notes that small businesses, particularly private entities and their finance and accounting functions, are currently burdened with responding to the crisis. They are engaging in critical business activities such as interpreting and applying the CARES Act, assessing cash flows, analyzing impairments, negotiating with creditors, and navigating through contract obligations. The FASB’s delay will allow these entities to transition to the new standards after the current crises eases and resources become available.