Lease Update: ASC 842
- Effective date: For private companies and private NFPs, to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022
- The new update requires a lessee to recognize the assets and liabilities that arise from leases (operating and finance), has different income statement and cash flow results
Lease Update: ASC 842 Financial Statement Reporting for Operating Leases
- Statement of financial position – Right-of-use asset and right-of-use liability: recorded at the present value of the lease payments
- Statement of activities – Recognize a single lease expense which includes both interest and amortization allocated over the lease term on a straight-line basis
- Footnote disclosures:
- Information about the nature of its leases, including: The existence and terms and conditions of options to extend or terminate the lease. A lessee should provide narrative disclosure about the options that are recognized as part of its right-of-use assets and lease liabilities and those that are not.
- Information about significant assumptions and judgments made, including: The determination of whether a contract contains a lease, the allocation of consideration in a contract between lease and nonlease components, the determination of the discount rate for the lease
Auditors’ Report Update: SAS 134
- Opinion section is first, basis for Opinion section: includes a statement that “the auditor is required to be independent of the entity”, clarifies auditors’ and management responsibilities, key audit matters section (as considered necessary)
In-Kind Contributions Update: ASU No. 2020-07
- Effective Date: The new standards are effective for annual periods beginning after June 15, 2021 (and for those who do interim reporting, interim periods within annual periods beginning after June 15, 2022). Early adoption is permitted.
- The new update requires more prominent presentation of contributed nonfinancial assets and enhanced disclosures about the valuation of those contributions and their use in programs