Steve Hobbs and Christopher Wright
Steve Hobbs and Chris Wright are Protiviti Managing Directors and leaders in the firm’s Financial Reporting Remediation and Compliance practice.
It’s official: As expected, on July 9, the Financial Accounting Standards Board (FASB) approved a one-year deferral of the effective date of the new revenue recognition standard it has developed in collaboration with the International Accounting Standards board (IASB).
Issued almost a year ago, this new guidance (Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers) resulted from a collaborative effort by the FASB and IASB to agree on a global standard based on common principles that can be applied across industries and regions.
What does this mean for companies?
As we have noted in our series of Flash Reports and webinars detailing the new revenue recognition accounting standard (see below), this deferral not only was expected, but it was an assumption baked into the planning and implementation practices among many companies that have started the transition to the new standard in earnest. In effect, a one-year delay still means “full steam ahead” for public companies, especially for those who may not have begun working on the transition process.
Half of the current year is now spent. The only delay is in the effective date of the standard; there should be no delay in management’s efforts to position the organization in a prudent state of readiness.
Also of note, the introduction of the “early adoption” option presents an opportunity for those who have started, were focused on the new standard and now are, or will be, ready to adopt early. In addition, it presents yet another choice (whether to early adopt) to the list of decisions for companies, which already includes deciding whether to adopt prospectively or retrospectively.
For additional information, I’ve provided links to our relevant Flash Reports and webinars on the new standard, which should be helpful for those interested in learning more about the standard, its requirements and how to get started with a detailed diagnostic to address them.
- Flash Report: It’s Here, Are You Ready? – Transitioning to the New Revenue Recognition Standard
- Flash Report: Effective Date of Revenue Recognition to be Deferred
- Protiviti Webinar Series: The New Revenue Recognition Rules