Recent Accounting Pronouncements

12 Months Ended

Sep. 30, 2021

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

3. Recent Accounting Pronouncements

 In the fiscal fourth quarter of 2021, the Company lost its status as an ‘‘emerging growth company’’ (‘‘EGC’’) as defined by the Jumpstart Our Business Startups Act (‘‘JOBS Act’’) due to annual gross revenues exceeding $1.07 billion. As an EGC, the Company was allowed to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company had elected to use this extended transition period under the JOBS Act and therefore retroactive to October 1, 2020, the first day of the current fiscal year, the Company was required to transition to the adoption dates applicable to public companies.

Recently Adopted Accounting Standards

 In February 2016, the FASB issued Topic 842. This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Topic 842 was effective for a public company’s annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. As an EGC, the Company had previously elected to adopt Topic 842 following the effective dates for private companies beginning with annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Due to the loss of EGC status as indicated above, the Company was required to adopt Topic 842 for fiscal year 2021. Subsequent updates to Topic 842 provided an optional transition method that allows companies to elect to apply the standard using the modified retrospective approach at its effective date, versus recasting the prior periods presented.

 The Company adopted the new standard as of October 1, 2020 using the modified retrospective transition. The Consolidated Financial Statements for the twelve months ended September 30, 2021 are presented in accordance with ASC 842, while comparative years presented are not adjusted and continue to be reported in accordance with guidance under ASC 840. We elected the package of practical expedients, which permits us to not reassess the prior conclusions about lease identification, lease classification and initial direct costs. We elected the short-term lease recognition exemption for all leases that qualify. We have both real estate leases and equipment leases that are impacted by the new guidance. Our leases do not provide an implicit rate, therefore we use our incremental borrowing rate at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. Total adjustment related to the adoption of Topic 842, net of tax, was recorded as $1.1 million increase in retained earnings. See Note 18 for additional disclosure.

 In June 2016, the FASB issued ASU 2016-13, ‘‘Financial instruments — Credit Losses’’ (“ASU 2016-13”). ASU 2016-13 requires entities to report ‘‘expected’’ credit losses on financial instruments and other commitments to extend credit rather than the current ‘‘incurred loss’’ model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. ASU 2016-13 is effective for a public company’s annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods. As an EGC, the Company had previously elected to adopt ASU 2016-13 following the effective date for private companies beginning with annual reporting periods beginning after December 15, 2022, including interim periods within those annual periods. Due to the loss of EGC status as indicated above, the Company was required to adopt ASU 2016-13 for fiscal year 2021. The adoption of the standard did not have an impact on the consolidated financial statements. 

Standards Issued But Not Yet Adopted

 In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes”. The pronouncement is effective for a public company’s annual reporting periods beginning after December 15, 2020, and interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on the consolidated financial statements. The Company plans to adopt the pronouncement in fiscal year 2022.

 In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform”, which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. The guidance is effective upon issuance and expires on December 31, 2022. The Company is currently assessing the impact of the LIBOR transition and this ASU on the Company’s financial statements.

 In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The pronouncement is effective for a public company’s annual reporting periods beginning after December 15, 2022, and interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on the consolidated financial statements. The Company plans to adopt the pronouncement in fiscal year 2024.