FASSUB to be Updated for the Implementation of FASB ASU 2015-03


On October 5, 2016 HUD announced updates will be made to the FASSUB system on the evening of October 6th, 2016. Download the announcement here.

In April of 2015 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-03 (ASU 2015-03). ASU 2015-03 changes the way debt issuance costs are reported. Debt issuance costs, prior to this notice, were reported on the balance sheet as assets and amortized over the life of the loan(s). ASU 2015-03 requires these costs to be reported on the liability side of the balance sheet as a discount to the debt. Amortization of the discount will be reported as interest expense. ASU 2015-03 is effective for financial statements with fiscal years beginning after December 15, 2015.

The REAC FASS-FHA team is modifying the FASSUB system to align it with ASU 2015-03. FASS-FHA staff received invaluable assistance from industry experts in deciding what changes needed to be made to the current chart of accounts. After carefully weighing input from several sources we decided to offer two different financial reporting options:

  1. Discount each debt obligation individually
  2. Discount debt obligations collectively

Using the first approach submitters will remove debt issuance costs from the asset side of the balance sheet and will transfer them to the liabilities side of the balance sheet by discounting the principal balance of each debt obligation to which the costs apply. In the second approach submitters will remove the costs from the asset side of the balance sheet and transfer the entire balance to a new account on the liabilities side of the balance sheet entitled Debt Issuance Costs. The Debt Issuance Costs account will then be subtracted from debt obligations to arrive at total long-term liabilities. Both approaches will require submitters to amortize these costs as an increase in interest expense on the statement of operations.

Several changes will be made to the current chart of accounts including the following:

  • Account 1520 – Deferred Financing Costs, will be deleted at a future date*
  • Account definitions for several long-term mortgage and loan accounts will be amended to include the verbiage: “This account may be shown as net of unamortized debt issuance costs”
  • Account 2340 – Debt Issuance Costs will be added
  • The business rules for account 2300T – Total Long-term Liabilities will be amended to subtract the new account 2340 from total liabilities
  • Account definitions for interest expense accounts will be modified indicating that these accounts should also include amortization of debt issuance costs.
  • The account definition for Account 6610 will be modified to strike the reference to “loan fees”
  • Account S1200-486 – Amortization of Debt Issuance Costs will be added to the statement of cash flows (indirect method section)
  • The business rules for account S1200-610 – Net Cash provided by (used in) Operating Activities will be modified to add in the new account S1200-486

These account changes will be implemented in the evening of October 6. Specific account changes can be viewed in this document. Changes are shown in red.

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