The Financial Accounting Standards Board on Thursday proposed a coronavirus-related delay to its standard on accounting for long-duration contracts at insurance companies.
Topic 944 (referred to as LDTI) is scheduled to take effect for large Securities and Exchange Commission filers for fiscal years and interim periods within fiscal years beginning after Dec. 15, 2021. The proposal seeks to delay the effective date an additional year.
The proposal would also push back the effective date for all other entities to fiscal years beginning after Dec. 15, 2024, and interim periods within fiscal years beginning after Dec. 15, 2025.
“Some insurance companies expressed concerns about their ability to perform a quality implementation of LDTI while managing the effects of the COVID-19 pandemic,” said FASB Vice Chairman James L. Kroeker in a statement. “The proposed ASU would provide these companies an additional year, while also reducing complexity for companies that remain on track to make a successful transition to the standard by their current effective date.”
Under the proposed Accounting Standards Update (ASU), early adoption would still be permitted and further streamlined by allowing insurance companies to restate only one previous period, rather than two, if they choose to early adopt. FASB notes the change is designed to make it easier and cost-effective for businesses to maintain their current timelines regarding implementation.
The comment period on the proposal ends Aug. 24.
The proposal marks the first ASU during the tenure of new FASB Chairman Richard Jones, who took over for Russell Golden on July 1. During Golden’s tenure, Topic 944, which was first issued in 2018, was pushed back a year for large SEC filers, three years for small SEC filers, and two years for private entities as part of a series of delays finalized in November 2019.
FASB last month finalized delays to standards affecting revenue recognition and leases as part of its ongoing monitoring of the effect of the coronavirus pandemic on the accounting profession.