The Financial Accounting Standards Board (FASB) released a proposal to extend the time companies have to implement and comply with the landmark new revenue recognition standard. This will push the compliance date back for most nonpublic companies to the year ended December 31, 2019. For those trendsetters that want to adopt early, it can be implemented for the year ended December 31, 2017.
In 2014, the FASB issued one of the most important standards it has released in recent years. ASU No. 2014-09, Revenue From Contracts With Customers, scrapped industry-specific guidance in U.S. GAAP and put into place a single, principles-based way for companies to account for one of the most important and asked about numbers (lines?) on the financial statement: revenue.
Because of the significance of these changes, many financial statement preparers and companies simply need more time to comply. For many organizations, there are concerns with a lack of resolution of accounting issues, a need to design and implement new internal controls, and a lack of resources to make it happen. This standard will affect the fundamentals of recording revenue transactions, which is conceptually the right process, but becomes a challenge when there are so many transactions to analyze.
While it appears that the delay is intended to give companies more time to implement, it does also leave more time for the FASB to consider amending the new standard to address other issues raised about uncertainties.
While the changes seem so far in the distance right now, it is still important for companies to consider them for many reasons, including long-term budgeting, evaluating current transactions that will be in place at that time, and for proper planning.
For more information on how to strategize for these coming changes, contact your Aronson advisor or Phil Steigner at 301.231.6200.