The International Accounting Standards Board has decided to delay the effective date of its revenue recognition standard by one year, just as the Financial Accounting Standards Board has pushed out its required implementation date to 2018.
IASB voted to confirm a one-year deferral because it is in the midst of developing clarifications to the standard that are intended to aid implementation. The board also approved the deferral because it would make the start dates for both new standards consistent. “The deferral will give companies more time to implement the standard in view of the clarifications that we will propose shortly,” said Hans Hoogervorst, chairman of the IASB, in a statement. “It also keeps the effective date aligned for IFRS and US GAAP.”
FASB decided recently to defer the effective date of the comprehensive new approach to the timing, recognition and measurement of revenue to be reported in financial statements. FASB and IASB both originally set the effective date at Jan. 1, 2017, with IASB allowing early adoption. In deferring the effective date, FASB also set an optional allowance for companies to adopt as of the original effective date if they were prepared to move forward.
FASB is developing guidance meant to answer a handful of the many questions that have surfaced through the boards’ Joint Transition Resource Group. FASB’s guidance is focused on clarifying the original guidance around identifying performance obligations, recognizing revenue on licensing agreements, and recognizing revenue on a gross vs. net basis depending on the involvement of third parties in a contract arrangement.
FASB said it expects to finalize its guidance by the end of 2015. The IASB says it plans to publish proposed clarifications later in July. Experts are urging companies to move forward with implementation plans despite any pending changes to the guidance.