Pub. 11 2020 Issue 2

www.wvbankers.org 28 West Virginia Banker By Patrick McGraw, Arnett Carbis Toothman LLP Accounting Issues Impacting Financial Institutions During COVID-19 I n order to provide some temporary relief during the COVID-19 crisis, the Financial Accounting Standards Board (“FASB”) has voted to delay effective dates to certain entities for implementing new lease and revenue recognition standards. In April, the FASB issued a proposed Account- ing Standards Update (“ASU”) that would grant a one-year effective date delay for certain entities in applying the new lease and revenue recognition standards. The proposed ASU would provide private companies the option to apply the new leasing standard for fiscal years beginning after Dec. 15, 2021, and the new revenue recognition standard for fiscal years beginning after Dec. 15, 2020 (if financial statements have not been issued). In May, the FASB reaffirmed its decision and voted to delay the lease and revenue recognition ASU effective dates for private companies. While changing the ef- fective date for adopting the new revenue standard will most likely not have a major impact on the financial statements of financial institutions, it could have a significant impact on loan customers; for example, certain loan covenants that might need to be adjusted once the standard is implemented can be delayed a year. In addition to the tentative effective date of delays to the lease and revenue recognition standards, the CARES Act includes a provision that provides large, public banking organizations, required to adopt the current expected credit