A recent survey conducted by KPMG finds that 64% of corporate finance executives remain unsure of how they will adopt the converged revenue recognition standard that was issued back in May of 2014. Consequently, it seems appropriate that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), who are responsible for the converged standard, decided last month that they would propose certain clarifications regarding the new guidance. Such clarifications are expected to include additional guidance on licenses of intellectual property and identifying performance obligations. In conjunction with providing these clarifications, FASB is also considering delaying the implementation deadline in order to provide preparers with more time to transition their processes accordingly. However, until such a delay is finalized, the standard is currently scheduled to apply for reporting periods beginning after December 15, 2016 for U.S. public companies and, for companies that use International Financial Reporting Standards (IFRS), for periods beginning on or after January 1, 2017.
Other findings from KPMG’s survey include the fact that revenue recognition implementation is the very top year-end reporting concern for 32% of finance executives. 22% cited the improvement of disclosure effectiveness as their paramount concern, and another 20% indicated that their top concern was implementation of the 2013 update to the internal control framework created by the Committee of Sponsoring Organizations of the Treadway Commission. Adding further uncertainty to financial reporting matters for executives is the possibility that the Securities and Exchange Commission could begin to offer IFRS as an option to public companies; the survey found that 51% of respondents were undecided on this issue, with 8% planning to adopt IFRS if possible and the remainder electing not to adopt IFRS.
Whether your company is working to implement the new standards above or simply want to streamline existing reporting processes, GBQ is always there to help navigate these new territories.