Need more time to prep for revenue recognition? You might get it.
For every organization that must comply with the profession’s new revenue recognition standard — and that pretty much means every organization, period — the biggest concern is time.
The standard, which was released in May by the Financial Accounting Standards Board and the International Accounting Standards Board, centers on the recognition of revenue from contracts with customers and “is designed to create greater comparability for financial statement users across industries and jurisdictions,” writes Ken Tysiac in the Journal of Accountancy.
Here’s the problem: The original deadlines called for any companies that file under U.S. GAAP to implement the new standard by Jan. 1, 2017. Officials at many of the companies in question have complained, saying that simply isn’t enough time.
Regulators apparently are listening. FASB and IASB officials have said recently that they might delay the implementation deadline in the wake of those complaints.
That’s probably a good thing. The more we hear about the standard, the more unsure companies seem to be about the impact it will have on business.
While most companies are at least somewhat familiar with the standard, CFO.com’s Matthew Heller reports that “35 percent of companies had not yet attempted to quantify the impact of the new standard on financial statements and 23 percent were not sure whether it would have a material impact on income statements or balance sheets.”
Compliance Week’s Tammy Whitehouse added this:
“(Seventy-seven) percent of companies expect to make some significant changes to IT systems to adopt the standard, but few could estimate the costs the company would incur to adopt the standard. The result suggest companies still have a lot of work ahead of them to understand the standard and its implications for their accounting, controls, and business generally.”
Sounds like we could all put that extra time to good use.
Still looking for answers to your revenue recognition questions? There are a lot of resources out there to help us make sense of it all. Let’s start with these:
- Revenue recognition: Get to know it … now
- The AICPA’s revenue recognition resource center
- The Journal of Accountancy’s archive of revenue recognition articles
Related MACPA programs:
- Dec. 3 webcast: Update for Accountants and Auditors
- Dec. 9 webcast: New FASB Developments for Business and Industry