On April 1, 2015, the FASB agreed that a delay for the revenue recognition standard was necessary. The proposal would push back the effective dates 1 year. If you are in the accounting world, you may have heard there are big changes on the horizon for revenue recognition. However with large changes, comes confusion and chaos. The FASB has been working to address the concerns and lack of clarification. That being said, yesterday, the FASB concluded that they could not address the issues and concerns in the time remaining until the first effective date.
For a summary of the proposed changes, see below. Excerpt from Checkpoint.com
- Private companies would not need to adopt the standard until fiscal years that begin after December 15, 2018, meaning 2019 for companies that are on calendar fiscal years. Private companies would also have more time to comply with quarterly reporting requirements. The FASB is proposing that they would not have to follow the new standard for quarterly reports and other reporting periods of less than a year until after December 2019.
- Under the proposal, companies also would be allowed to adopt the standard according to the original 2017 timeline.
- The proposal, which will be issued for a 30-day comment period in the coming weeks, attempts to address criticism that the FASB and IASB did not give companies enough time to adopt the landmark, international accounting standards when they were published in May 2014 with a 2017 effective date.
- The IASB plans to hold a meeting later in April to decide whether to allow a delay for companies following IFRS.
- The revenue recognition standards, published in May 2014, erased the industry-by-industry revenue guidance in U.S. GAAP and ushered in a single, principles-based model for companies worldwide to calculate what is considered a key indicator of financial performance.
- The standards are considered such a change to current accounting that the boards in February 2013 agreed to give companies an unusually long lead time to implement the forthcoming changes. But the boards did not publish the standards until May 2014, and the FASB plans to tweak its standard to answer questions that arose following the publication. Because of the significant changes the standards will require to financial reporting systems, many companies told the FASB they would need extra time. SEC officials have said several times in recent months that they support a delay.