FASB Finalizes New Lease Accounting Standard

The Financial Accounting Standards Board yesterday issued its new lease accounting guidance, which requires all operating leases to be recorded on the balance sheet of lessees. The new standard is expected to be issued by year end, with an effective date of fiscal year 2019 for public business entities and 2020 for non-public business entities.

The standard, which culminates a project lasting nine years, will not only change how credit officers review the financial statements of their borrowers, it will add billions of dollars in assets and liabilities onto bank balance sheets and could have an impact on bank regulatory capital and leverage ratios.

Further information about the new standard—including a FASB In Focus overview newsletter, a FASB: Understanding Costs and Benefits document, and a video titled “Why a New Leases Standard?“—is available at www.fasb.org. To participate in a working group to address the regulatory implications of the new leasing standard, please contact ABA’s Melvetta Dockery.