The US Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update on Wednesday that would delay the effective date of the new, converged revenue recognition standard by one year.
The board voted April 1st to issue the proposal, Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which seeks public comments by May 29th. The International Accounting Standards Board (IASB) voted Tuesday to propose a similar delay, and its exposure draft is expected to be issued in May.
Under FASB’s proposal, public organisations would be permitted to apply the new revenue recognition standard to annual reporting periods beginning after December 15th 2017. Nonpublic organisations would be permitted to apply the new standard to annual reporting periods beginning after December 15th 2018.
Public organisations would apply the new standard to interim reporting periods within annual reporting periods beginning after December 15th 2017. This means that a public organisation would be required to apply the new standard beginning in the first interim period within the year of adoption.
Meanwhile, nonpublic organisations would apply the new standard to interim reporting periods within annual reporting periods beginning after December 15th 2019. This means that a nonpublic organisation would not be required to apply the new revenue standard in interim periods within the year of adoption.
Early application would be permitted for both public and nonpublic organisations as of the standard’s original public organisation effective date. Comments can be submitted at FASB’s website.
FASB members agreed to propose the deferral after financial statement preparers requested more time for implementation. A May 2014 issuance date that was several months behind schedule played a role in the delay, as did amendments that FASB and the IASB are making to the standard through their joint transition resource group’s review and feedback process.
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.