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Good News for Treasurers: Revenue Recognition Regs Delayed

  • By Andrew Deichler
  • Published: 4/30/2015
Following an outpouring of pressure from the private sector, the U.S. Financial Accounting Standards Board (FASB) proposed a one-year delay for businesses to adopt new revenue recognition standards. The announcement comes a day after the International Accounting Standards Board (IASB) voted to propose a one-year deferral for the rules.

Approved by both boards last year, the standards’ goals are simplification and international convergence of revenue accounting. However, many stakeholders have provided feedback that they will need more time to adjust to the rules.

The proposed delay would see the rules take effect in 2018 for public companies. A deferral would be music to the ears of many corporate treasurers, who are currently scrambling to meet the original deadline (late 2016 for companies using U.S. Generally Accepted Accounting Principles and early 2017 for companies using International Financial Reporting Standards).

Marc Siegel, a FASB board member, told the Wall Street Journal that the most important line item on an income statement is revenue, so a “quality and smooth transition” absolutely necessary. “There were also concerns about having the systems ready to do an effective and quality implementation," he said.

Apple presented some of the challenges that it would face when implementing the new rules, noting that other multinational corporations will likely experience the same issues.

FASB is seeking public comment on the proposed delay through May 29. The rule maker is also asking whether it should provide an optional two-year deferral for all entities that apply the guidance retrospectively to each reporting period represented.

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