The Financial Accounting Standards Board is studying three specific implementation issues that have cropped up in the adoption of the new revenue recognition standard to determine whether the standard should be revised, and with that whether the effective date of the standard should be delayed.

FASB Chairman Russ Golden said at a national accounting conference he has authorized FASB staff to conduct research on three specific issues that have produced different views among members of FASB and IASB’s Joint Transition Resource Group to determine whether the board should issue new guidance. Those include questions around how to apply the new standard to licensing agreements, when revenue should be recognized on a gross versus net basis, and how to determine performance obligations. “When the research is done, the staff will bring us potential agenda requests,” he said. The time line on that research and potential rule-making is not clear, he said, but the board hopes to see results from the staff research in the first quarter of 2015.

At the same time, FASB members are already conducting field visits with an unnamed group of companies to get a sense for how their implementation efforts are progressing and whether their difficulties suggest a delay in the effective date might be warranted. “If companies have started to consider it and need more time, we’d want to know why they need more time,” Golden said. “That’s why we want to go out and specifically talk to companies and see what they have done to date.” If the staff’s research into the early implementation issues leads to possible new rule-making, that might also factor into any board decision on a delay in the effective date, said Golden. 

James Schnurr, chief accountant of the Securities and Exchange Commission, said at the same conference he and his staff are monitoring the implementation efforts closely, but he doesn’t foresee any specific need for SEC rule-making with respect to revenue recognition. “We’re working with the two boards and the resource group and others to formulate an approach to deal with the number of implementation issues that are coming up with the idea of dealing with them in an efficient, appropriate manner,” he said. He adds he believes a delay in the effective date is possible. “It depends on a number of things, but certainly if the parties determine there are implementation issues that require additional standard setting, I would think that would be a reason why you’d have to delay the adoption.”

Susan Cosper, technical director at FASB, said the Transition Resource Group has so far taken in 28 different implementation questions, 18 of them from U.S. stakeholders. They fall into some broad categories, she said, including questions that involve judgments that would be difficult to address with standard setting; audit issues, especially questions on internal controls and documentation; questions related to SEC issues, such as how to interpret staff accounting guidance under the new standard; and questions that might require standard setting to clarify.

Ian Mackintosh, vice-chairman of the International Accounting Standards Board, said at the conference the IASB is not hearing a call for a delay in the effective date. That could be, surmised Golden, because U.S. companies are required to present three years of data under a single accounting approach in financial statements while many other jurisdictions only require two years of data.

Companies that want to adopt the standard retrospectively would, ideally, be ready to gather data under the new standard beginning in 2015 to have three years worth of comparable data to present in 2017 financial statements when the standard is scheduled to take effect. “We have an understanding of the potential uncertainty, and companies need to have a reduced uncertainty about their accounting conclusions before implementing their accounting processes,” Golden said.