In April of last year, ECFA published a news item regarding the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which significantly affects financial statement accounting for leases. The key difference between existing lease guidance and the new guidance under Topic 842 is the requirement for lessees to recognize lease contracts with lease terms greater than 12 months, including operating leases, on the statement of financial position.

You can learn more about this lease standard by reviewing the news release from last year and by reviewing this resource in the ECFA Knowledge Center.

In November 2021, the FASB issued ASU 2021-09, which expanded the existing policy election for not-for-profit entities to use a risk-free rate by class of underlying asset rather than the previous requirement to make the election for all leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Earlier application is permitted.

If you believe you will be impacted by ASU 2016-02 and ASU 2021-09, ECFA recommends initiating a conversation with your Certified Public Accountant (CPA) to determine if these Updates apply and next steps in implementation.

CapinCrouse has also developed a timely and helpful Lease Toolkit. This toolkit has recently been updated with the information from ASU 2021-09 and will help with understanding the new standard and generating the lease calculations and disclosures needed. You can access this free toolkit by clicking here.