Revenue Recognition Standard DelayedPosted: April 6, 2015
On a 4-3 vote, the FASB decided to propose a delay to the revenue recognition standard by one year. This means for public companies, it will be effective in 2018 (instead of 2017) and private companies will be required to follow the new standard in 2019. In a twist, the FASB also voted to allow companies to early adopt the standard up to the original implementation date of 2017.
The interesting part about the 3 votes against the delay for one year was that they were not against a delay, but instead they thought the appropriate delay was two years which was also the FASB staff recommendation. Some other interesting comments during the debate included:
- One board member stating that while they understood they were still making changes to the standard (expect to see other EDs covering several minor and not so minor changes to the standard in the coming months as well), they all should make the standard “easier” to implement so we shouldn’t need more time to implement the standard even though we don’t know what we are implementing yet.
- The chairman acknowledging that the standard was issued nine months later than anticipated from the original 2017 implementation date was set, and stating that we should get that year back, but also implicitly stating that all of the current changes do not rise to the level of necessitating a delay.
- Another board member citing the fact that we were only given 15 months to implement EITF 08-01 “which was just as big of a change as this standard” with no acknowledgement that 08-01 was really just billing on EITF 00-21 and previous SEC guidance. (As you can gather I have a different opinion of the scale of the change required by 08-01).
The FASB is providing for a very short 30 day comment period, most of which is likely to occur during the calendar first quarter reporting period. This is your opportunity to share your views on the appropriate length of a delay in the Standard so watch for the ED and share your thoughts.