One piece of news and more credence to an ever-growing assumption were the big takeaways from the latest meeting of the accounting minds.
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), in their joint meeting on Wednesday, proposed that some portions of their converged revenue recognition standard need to be ironed out further in light of implementation issues brought to their attention.
As the Journal of Accountancy reported, exactly how such revisions take shape is yet to be determined as both governing bodies conceded change was needed, but couldn’t agree on the particulars.
Staff for both boards, which jointly issued the revenue recognition standard in May 2014, will seek feedback on proposals that clarify the standard’s guidance for licenses of intellectual property and identifying performance obligations. Numerous implementation questions have prompted the boards to act.
FASB is also considering changing the effective date as a result of the feedback, an issue to be decided later, but becoming more inevitable judging by the commentary.
“There’s going to be a delay in the effective date,” said IASB member Patrick Finnegan in the JofA piece. “…If a company was going to apply this standard and restate three years and try to be ready… they’d have to know the answers to these questions on [Jan. 1, 2015]. And they’re not going to know the answers. So it’s pretty obvious that there’s going to have to be a deferral in light of all these potential changes we’re talking about.”
Currently, the standard is set to take effect for reporting periods beginning after December 15, 2016, for U.S. public companies, or reporting periods beginning on or after January 1, 2017, for companies using IFRS.