FASB agrees to propose revenue recognition standard delayFinancial statement preparers may get the option to take more time implementing the new revenue recognition standard. FASB agreed Wednesday to propose delaying the effective date by one year for both public and private companies. |
Thursday, April 2, 2015 |
By Ken Tysiac, Editorial Director, Journal of Accountancy Financial statement preparers may get the option to take more time implementing the new revenue recognition standard. FASB agreed Wednesday to propose delaying the effective date by one year for both public and private companies. The board voted to propose having the standard take effect for reporting periods beginning after Dec. 15, 2017, for public companies that use U.S. GAAP for their financial statements. Under the proposal, private companies would have an additional year past the public company effective date to implement the standard. Early adoption would be allowed as of the original effective date for public companies (reporting periods beginning after Dec. 15, 2016). Public companies that adopt early would be required to do so on an annual and interim basis. Private companies that adopt early could do so on an annual basis, and subsequently for annual and interim periods. FASB directed its staff to prepare a formal written ballot for a proposal seeking feedback in a 30-day comment period. The International Accounting Standards Board (IASB) also is expected to consider later this month a possible delay in its effective date. The need for more time The converged standard has been portrayed as the biggest achievement in the convergence process undertaken by FASB and the IASB. But some financial statement preparers began requesting a delay in the effective date shortly after the standard was released in May 2014, and clarifying changes the boards recently agreed to propose have added to the momentum for a delay. FASB members and staff sought feedback from financial statement preparers, a process that included taking site visits to companies in an attempt to understand their needs. FASB’s staff report to the board cited some financial statement preparers’ concerns with:
FASB Chairman Russell Golden also estimated that an unexpected delay by the boards in issuing the standard cost preparers nine months of implementation time. Industries affected Board member Daryl Buck said his visits with preparers in the media, entertainment, and software manufacturing industries convinced him of the necessity for the delay. Preparers in those industries are particularly affected by potential changes in license of intellectual property guidance that the boards plan to propose. “For those companies, that is a huge percentage of their revenue, and the guidance is still in somewhat of a state of flux,” he said. All board members supported proposing a delay. Buck was one of three board members who advocated for a two-year delay for public companies, but the others expect one year to be sufficient. The option for early adoption was extended to accommodate preparers who have had less trouble implementing the standard. |
Related links: http://www.journalofaccountancy.com/news/2015/apr/revenue-recognition-effective-date-delay-201512060.html |