Transition of New Revenue Recognition Standards
The Financial Accounting Standards Board (FASB) is planning on issuing the final converged standard on revenue recognition this summer, hopefully as close to June 21st as possible, according to FASB chair Leslie Seidman. The FASB has been working with the International Accounting Standards Board on a joint project on revenue recognition. The boards issued an original exposure draft of the new proposed standard in June 2010 that was met with much resistance. The boards ultimately decided to modify the original proposal and a revised exposure draft was reissued on November 14, 2011.
Because of the principal-based nature of the standard, FASB will have a long transition period as well as an implementation group to assist practitioners with implementing the new standard. The board’s tentative effective date of the new standard is for annual reporting periods beginning after December 15, 2017 for nonpublic entities and for annual periods beginning after December 15, 2016 for public entities.
In a May 2013 article on accoutningtoday.com titled FASB to Ease in New Revenue Recognition Standards, Paul Beswick, chief accountant in the SEC’s Office of the Chief Accountant, is quoted, “When you put a new standard in place and you’re talking about the top line, there are obviously going to be implementation issues. Leslie has talked about this, that there is going to be an implementation group to try to deal with those issues, and I think we can probably see some of them right now. When you’re going away from some of the more proscriptive guidance to more subjective, there’s going to have to be a discussion of people accepting different views and subjectivity.”