The accounting professional group working through questions on the new revenue recognition standard is targeting the end of the first quarter to reach at least initial consensus to the last batch of a vast assortment of topics that have been presented for consideration.
The American Institute of Certified Public Accountants has published the first edition of its Audit and Accounting Guide addressing the new revenue recognition standard, but the 157-page guide is far from complete. The guide will eventually contain dialogue contributed by each of the AICPA’s 16 different industry task forces; the initial publishing contains working papers from only two task forces so far — the Aerospace and Defense and the Asset Management groups.
Public companies are facing a Jan. 1, 2018, deadline to implement the new, principles-based revenue recognition standard adopted by the Financial Accounting Standards Board to do away with hundreds of prescriptive historical accounting pronouncements, some of which provided industry-specific accounting requirements. The Revenue Recognition Working Group of the AICPA’s Financial Reporting Executive Committee is coordinating the task force efforts and has set an end-of-quarter goal to have reviewed everything bubbling up from the task forces.
That effort is not to be confused with the Revenue Recognition Transition Resource Group formed by FASB and the International Accounting Standards Group to address questions as well. FASB’s TRG effort has led to a handful of clarifications to the standard to drive consistent conclusions, but the AICPA’s FinREC process is meant to help steer industry practices toward common interpretations for the sake of consistent reporting.
The Revenue Recognition Working Group has so far vetted roughly 75 percent of the issues that have been raised by the industry task forces, said Kim Kushmerick, senior technical manager at the AICPA. “We have this master list of issues, and now that it’s 2017 we need to get all this information out,” she said. “Our goal by the end of the first quarter is to get the remainder of issues into the working group so everyone can be on the same page as to what the remaining issues are.”
The task forces are producing working papers for public comment before they are published in the Audit and Accounting Guide. With the eight largest firms represented on the working group, FinREC is confident that will facilitate the dispersion of common views into the profession in time for implementation this year, said Jim Dolinar, chairman of FinREC and managing partner at Crowe Horwath. The eight largest firm “audit 99 percent of the U.S. public market cap, so we have the firms representing the bulk of the issuer practice at the table,” he said.
With the standard taking effect in 2018, companies are now in “crunch time,” said Dolinar. “This is going to be a real busy year for a lot of companies in dealing with revenue recognition.”