The International Accounting Standards Board (IASB) on Wednesday voted to approve a one-year delay in the effective date of the converged revenue recognition standard. The delay keeps IASB’s effective date in line with that of the US Financial Accounting Standards Board (FASB), which also voted in favour of a one-year deferral earlier this month.
The new effective date of IFRS 15, Revenue From Contracts With Customers, is January 1st 2018.
Preparers applying IFRS continue to have the option to apply the standard early; preparers using US GAAP are permitted to apply the new standard early on the original effective date. The IASB plans to publish the formal amendment specifying the new effective date in September.
The standard is the result of many years of collaboration between FASB and the IASB in an effort to produce consistency in financial reporting of a critical metric across jurisdictions and sectors. The IASB and FASB issued the standard jointly in May 2014, several months later than expected. Since then, some financial statement preparers have complained that the original effective date did not give them enough time to implement the standard.
The boards also are proposing clarifications to the standard that preparers will need to consider. FASB has issued two proposed Accounting Standards Updates related to the standard and plans to propose other changes. The IASB plans to propose some clarifications to the standard later this month.
These proposed changes came about as a result of the boards’ joint transition group, which evaluated feedback from preparers on implementation challenges and referred some issues to the boards for possible additional standard-setting.
“The deferral will give companies more time to implement the standard in view of the clarifications that we will propose shortly,” IASB Chairman Hans Hoogervorst said in a news release. “It also keeps the effective date aligned for IFRS and US GAAP.”
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine editorial director.