The distinct possibility that some on-the-ball companies might be granted early adoption status for the new revenue recognition rules is the latest tidbit to come out of the Financial Accounting Standards Board’s own readiness research.
That development, plus the chance of additional rule-making in response to FASB findings, is being reported in Compliance Week and elsewhere in advance of this month’s key gathering by the governing board.
As we noted last week, FASB is getting closer to weighing in on a possible delay of 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. The consideration, a result of numerous concerns over implementation will be a hot topic on the FASB February meeting agenda as staff is scheduled to report on outreach findings.
While an adoption date decision isn’t likely until the second quarter of 2015, mixed feedback on the readiness of companies has FASB considering a green light in 2017 for those who are prepared even if a delay is enacted.
“The FASB has been conducting outreach with organizations to determine whether it is necessary to delay the effective date of the new revenue recognition standard,” said FASB spokesman Chris Klimek. “To date, we have received mixed input from stakeholders. The Board will consider that input as part of its decision-making process.”
Currently, the new revenue recognition standard doesn’t permit entities to adopt before the 2017 effective date. The IASB, which set the same 2017 effective date, does allow for companies to adopt the standard early if ready to do so. The IASB, which as not received as much feedback requesting a delay, continues to monitor the ongoing FASB issues and research.
Specific implementation issues also up for discussion before the board in February include the treatment of licenses of intellectual property and performance obligations in the context of a contract. As experts have noted, if these and other issues result in the recommendation of new guidance, that’s a pretty clear indicator on the likelihood of a deferral of the effective date.