Companies that consider the new revenue recognition standard to be immaterial to their financial results should also consider whether the required new disclosures are immaterial before disclosing as much to investors. Consider that a warning from the Securities and Exchange Commission.

At a one-day conference on the effort at public companies to adopt the massive new accounting requirements around revenue recognition, companies heard the SEC is concerned not only about the effect of adopting the new rules on the numbers in the financial statements. The effect on disclosures is equally important, said Sylvia Alicea, a professional accounting fellow in the office of the chief accountant at the SEC, at the Deloitte/Bloomberg BNA event.

The SEC has been reminding companies for months to be sure they are following the requirements of Staff Accounting Bulletin No. 74, which requires companies to disclose to investors the effect they expect from adopting new accounting standards. The revenue recognition standard is expected to be huge when it takes effect for public companies in 2018, completely changing the ways companies are required to measure and recognize revenue in financial statements.

Preliminary looks at 10-K and 10-Q filings have been encouraging, said Alicea, but she has noticed some companies are indicating the expected effect of the new standard is not considered to be material. That’s a little hard to believe, she says. “Even if the extent of change to the balance sheet and income statement is not deemed to be material, the related disclosures may be material,” she said. “The scope of the new standard addresses not only the amounts and timing of revenue, but also new comprehensive disclosures about contracts with customers, including the significant reasonable judgments registrant have made when applying the guidance.”

That means if a company is going to say the standard is immaterial, it has to include consideration of the disclosure requirements, she said. “The basis for any statement that the standard is immaterial should reflect the full scope of the new standard, which covers recognition, measurement, presentation and disclosure,” she said.

Alicea said she’s heard the argument that SAB 74 requires companies to consider only the effect on the financial statements themselves and not footnote disclosures, but she doesn’t buy it. “I believe such a view misses the definition of financial statements, which includes the accompanying notes,” she said.