Looks like it’s wait ‘till next month to learn more about a possible delay in the effective date for sweeping revenue recognition rule revisions, folks.
As noted late last year, the Financial Accounting Standards Board (FASB) floated the possibility of delaying the 2017 effective date of Accounting Standards Update No. 2014-09, the newly converged guidelines adopted by FASB and the International Accounting Standards Board (IASB) last year, following numerous questions and concerns over implementation. Board staff has been researching key revenue recognition and implementation issues in the wake of such feedback and plans to report its findings at the board meeting in February, according to the Wall Street Journal and other reports.
It’s likely the second quarter of 2015 will bring a definitive answer on the topic following reports that FASB staff just this week updated the revenue recognition joint transition group of FASB and the IASB, formed following the adoption of the new guidance.
“Last Wednesday, a group of U.S. software companies, including Adobe Systems In., Symantec Corp. and VMware Inc., asked the FASB for more guidance and a two-year delay.”
— The Wall Street Journal, Jan. 26, 2015
The new guidance, which involves a five-step process and a host of new disclosures, is currently required to be adopted by public companies for interim and annual periods beginning after Dec. 15, 2016, which equates to an effective date in early 2017 for calendar-year organizations.
In a recent survey, nearly three-quarters of the respondents had not yet decided on a method of adoption for the new guidance. In the same survey, nearly two-thirds of those who responded estimated it could take a year to 18 months to adopt.
Not everybody, however, is pushing for a delay.
According to the Wall Street Journal report, General Dynamics Corp., the defense contractor, raised the concern that a delay means additional time and funds running parallel books with two different standards.
“FASB needs to consider that argument ‘very seriously’,” said Prabhakar Kalavacherla, of KPMG LLP, to the Wall Street Journal. Kalavacherla has been a board member of the IASB and worked on the project to align global revenue rules.
Whatever the decision on the effect date, companies should not slow down any ongoing implementation efforts. Better to hit the gas pedal rather than the brake.
Stay tuned for future posts as we continue to help you and your company prepare for this new standard.