OK, what we did there was use a headline alarming and accurate to entice you to read further and, well, it worked, right?
As said headline indicates, a report came out last week from Bloomberg BNA as a result of the August 31 FASB board meeting, during which the need for continued discussion on how to handle enhanced disclosures signals a delayed release of eagerly-awaited clarifications to the new revenue recognition standards.
The article from Bloomberg is, of course, newsworthy to the countless organizations struggling to prepare for the far-reaching accounting rule changes.
But does it really change anything? Doubtful. Preparing corporations still gotta prepare.
The list of small improvements and corrections expected out of the governing body in the fourth quarter of this year will likely be a little later for further review of “suggested enhanced disclosures about the existence of partially completed contracts expected to produce future revenue,” as the article described the unresolved hurdles of the disclosure topic at the FASB meeting.
Public firms must apply the new standard in January 2018. Interestingly, at last week’s session, board members did note a number of companies indicated plans to early adopt in 2017 under the original effective date, since pushed out a year in response to the multitude of requests for additional preparation time.
That one-year delay was deemed necessary because of the significant change in how this new standard is written – more principle-based rather than specific prescriptive requirements a company must follow – and the difficulty experienced by those initial “leading-the-pack” firms in how to actually apply it.
There’s no getting around the fact this adoption requires a great deal of time and effort. A small delay in the latest clarifications shouldn’t “derail” any recently gained momentum in this effort, to borrow from our own headline.
And, that scarcely-spotted momentum is finally in play, according to a new Compliance Week report.
“Many companies have made substantive progress over the summer,” said Eric Knachel, senior consultation partner at Deloitte, in the article released this week.
Knachel added that while the degree of progress did vary by size and type of company, it has been the larger firms in sectors including technology, aerospace, defense and entertainment leading the charge.
“The majority of those types of companies have either completed or are in the process of completing their assessments,” he said. “They are moving toward the implementation phase and planning significant implementation activities over the next months, depending on complexity.”
The same article notes that while progress is being demonstrated, quite a few companies either have yet to start preparation efforts or remain mired in the very early stages. Pretty scary when you consider what some of the firms deemed ahead of the curve are finding.
“Converting theoretical accounting to actionable business requirements is challenging,” said John McGaw, an accounting advisory partner at EY, of companies stymied by the diagnostics portion of their assessments.
“Raising issues and resolving questions is challenging,” McGaw said. “Most companies would say it is taking far longer than they anticipated.”
In the Compliance Week article, McGaw suggests firms struggling with technical questions, especially industry-specific ones, should lean on resources including the FASB-formed TRG, AICPA task forces and industry peers.
Experts across the board are urging companies to have a plan in place around the fourth quarter of this year in order to line up already in-demand resources.