Public companies are starting to lean toward a full retrospective adoption of the new revenue recognition standard, according to the latest data from Deloitte & Touche.

In a recent questionnaire of more than 170 representatives of primarily technology, media, and telecommunications companies, 38 percent said they were leaning toward or firmly decided on adopting the new revenue standard following the full retrospective approach. That means companies would present three full years worth of financial data beginning with the adoption of the new standard in 2018 as if the company had been following the new standard for all three of those years.

By comparison, only 25 percent said they were leaning toward or firmly decided on adopting the standard under the modified retrospective approach. Under that method, companies would present historical data using cumulative-effect adjustments with disclosures. More than one-third of those participating in the survey, or 37 percent, said they were still undecided on which method they will follow to implement the new standard.

“There does appear to be a shift in the thinking by companies,” say Eric Knachel, an audit partner at Deloitte & Touche. “A year ago, many were thinking they would follow the modified retrospective approach. Now more are leaning toward the full retrospective approach. It is still early in the evaluation stage, but this is a significant shift.” An earlier survey by PwC found companies were lagging in performing their assessments and planning implementation.

Companies are likely moving toward a full retrospective approach at least in part, says Knachel, to meet expectations of analysts, who are concerned about comparability. “Analyst expectations is a significant factor,” he says.

Companies also may be finding that the added effort under the full retrospective approach is not as great as they initially expected. In addition, they may be sensitive to what their industry peers are planning. “As peer companies in an industry are evaluating this and thinking about going with the full retrospective approach, others want to be comparable, so there’s a little bit of a domino effect,” he says.

According to the survey, fewer than 10 percent of individuals said their companies have begun executing an implementation plan, while only a few more than 10 percent said they were developing a plan. More than 30 percent said they were still performing their preliminary assessments. Only 13 percent of individuals said their companies had established a budget for implementation, and more than half said they didn’t know yet if the standard would have a material impact on their financial statements.

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