The US Financial Accounting Standards Board (FASB) issued an accounting standards update Wednesday that defers the effective date of its new revenue recognition standard by one year.
The board voted in favour of the delay on July 9th after considering implementation concerns from financial statement preparers. The deferral is formally described in Accounting Standards Update (ASU) No. 2015-14, Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date.
According to the ASU, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the new standard to annual reporting periods beginning after December 15th 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15th 2016, including interim reporting periods within that reporting period.
All other entities are required to apply the guidance to annual reporting periods beginning after December 15th 2018 and interim reporting periods within annual reporting periods beginning after December 15th 2019. All other entities may apply the guidance earlier as of an annual reporting period beginning after December 15th 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance earlier as of an annual reporting period beginning after December 15th 2016 and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance.
The International Accounting Standards Board (IASB) also voted last month to approve a one-year delay in the converged standard.
Preparers’ concerns about implementation are partly the result of clarifying amendments that FASB and the IASB have proposed.
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.
