The International Accounting Standards Board (IASB) voted Tuesday to propose a one-year delay in the effective date of the new, converged revenue recognition standard. The decision follows requests from financial statement preparers.
The proposal, which also would allow early adoption, keeps the IASB aligned with the US Financial Accounting Standards Board (FASB), which voted April 1st to propose a similar delay. IASB members said that although international convergence is important, the needs of the IASB’s constituents were more important in their decision to propose a delay.
“Everybody underestimated how much work it takes to do these things [for implementation],” IASB member Gary Kabureck said during Tuesday’s board meeting.
Under the proposal, the effective date would be January 1st 2018. The IASB plans to publish an exposure draft that would invite public comment, and would finalise its discussions on the issue at its board meeting in July.
Feedback the IASB received from financial statement preparers, particularly those in the telecommunications and automotive industries, requested a delay. Reasons cited by preparers, board members, and IASB staff for proposing a delay included:
- The original publication of the standard in May 2014 was delayed by several months.
- The IASB is proposing amendments to the standard that will require further analysis and work in implementation if they are approved. (FASB also is proposing changes to the standard.)
- The timing of the release of new IT software solutions may make it difficult for some companies to be ready to implement the new standard by the original effective date.
—Ken Tysiac (email@example.com) is a CGMA Magazine editorial director.