The SEC cares about the TRG, should you?Posted: March 14, 2016
James Schnurr, Chief Accountant of the SEC, recently said his office expects SEC registrants to follow the conclusions of the Joint Transition Resource Group for Revenue Recognition (TRG) on implementation questions constituents have raised about the new revenue standards issued by the FASB and the IASB. While the TRG’s views aren’t authoritative, he said he expects registrants, including foreign private issuers, that want to use accounting that differs from TRG conclusions to discuss their accounting with the SEC staff.
So what does this mean?
I think it means you better brush up on the 87 issues, 43 papers (excluding the papers that summarize the previous meetings discussions), the results from the six meetings already held and find out what happens in the three meetings that will be held in 2016. If you think the TRG is wrong, or even if you think the issue the TRG covered isn’t exactly the issue faced by your company, but its close, you probably need to think about discussing it with the SEC. At least if you discuss it now, you have a chance to change your systems and processes before you issue any financial statements if the SEC disagrees with you. I think that would be much better than making all those changes after you filed restated financial statements, and explained to your board and investors why you had a control failure in implementing the new standard.
And for all of you working at private companies thinking what the SEC does doesn’t matter to you, I suggest you think again. Your auditor will probably take their cue from the SEC and have the same position. So instead of talking to the SEC, if you are planning not to follow the TRG’s guidance on an issue, I suggest you take it up with your auditor sooner rather than later.
You can hear more on developments regarding the new revenue rules and other recent FASB developments during my presentation at the AICPA 2016 CFO Conference May 5-6 in New Orleans. To learn more about the conference go to www.AICPAStore.com/CFO.