National Defense Group Urges FASB to Extend Delay on Revenue Accounting Rules
The defense sector has asked FASB to extend a proposed delay on revenue rules to include all nonprofits, stating the rules amplify the negative financial impact brought on by the coronavirus (COVID-19) pandemic. The revenue rules exacerbate the sector’s liquidity and cash flow woes and subsequently limit its ability to provide services to members and America’s military, the National Defense Industrial Association (NDIA) told the board in an April 27 letter. The NDIA is America’s leading defense industry association promoting national security. “The national pandemic has significantly impacted liquidity and revenue streams for non-profit operations. Like many other institutions impacted by COVID-19, several NDIA contractual revenue streams have drastically declined,” Herbert Carlisle, General, USAF (Ret.), President and CEO of the NDIA, said. “We expect it will take months to negotiate new and revised contracts for future revenue streams.” Carlisle further said that without reasonable relief, the NDIA will need to transition staff and resources “from our critical warfighter and defense industrial base missions in order to comply with Topic 606 for the Fiscal Year ending on September 30, 2020.”
IASB Proposes to Ease Rent Concession Rules Amid Pandemic
On April 24, the IASB issued a proposal that provides companies that lease office space or buildings with an easier way to report rent concessions they have been given as a result of the coronavirus (COVID-19) pandemic. The changes would mean rent concessions made in 2020 would be accounted for as if they were not lease modifications. Companies that apply the expedient will need to disclose that fact. “The Board understands that lessees may have difficulty assessing whether a potentially large volume of COVID-19 related rent concessions are lease modifications and, for those that are, applying the required accounting in IFRS 16, especially in the light of the many challenges entities face during the pandemic,” the text of the proposal states. Companies must submit comments on the proposal by May 8.
GASB Issues New Implementation Guide on Various Topics
On April 23, GASB published an implementation guide that includes clarifications to accounting rules for leases and fiduciary activities, two significant standards for cities and states that can prove complex. The guide also addresses the financial reporting entity, certain asset retirement obligations, and conduit debt obligations, among other topics. Governments will have extra time to adopt the provisions because of the coronavirus (COVID-19) pandemic; the changes are primarily effective for reporting periods beginning after either June 15, 2021, or December 15, 2021. Earlier this month, the board proposed delays to several GASB statements and guides after accountants said they were unable to access important reporting information and were strapped for resources because of the pandemic.