Looking for consistency in application of the new revenue recognition standard, staff at the Securities and Exchange Commission are warning companies to be careful how they arrive at the many new judgments required under the new rules.

Wesley Bricker, deputy chief accountant at the SEC, said in a recent speech that the standard will lead to reporting that is consistent, relevant to investors, and faithful to the underlying economics of transactions if companies do their homework and apply appropriate professional judgment. “The mere hope to achieve the promise of a single standard will not be sufficient,” he said. He called on companies to move forward with implementation efforts “without delay” by understanding the key principles of the new standard and how they apply to a company’s specific business.

“Some may believe that nothing has changed for their company,” said Bricker. “That may be true, but I caution you to take this time to refresh your thinking about your arrangements with your customers. Take seriously how the change in existing revenue literature or additional guidance provided by the standard impacts your arrangements.”

Bricker advised companies to follow a sound judgment process, such as that outlined by the Center for Audit Quality’s Professional Judgment Resource, which provides a five-step process for arriving at effective judgments. He cautioned companies against rushing to conclusions just to get through the exercise or minimize any disruption. “Aggressive interpretations taken to preserve an existing reporting outcome that is not consistent with the principles of the new revenue standard will not be well received,” he said.

The SEC staffer also exposed the SEC’s angst over implementation efforts, with different groups pursuing different processes that could potentially lead to different interpretations. The Joint Transition Group run jointly by the Financial Accounting Standards Board and the International Accounting Standards Board has fielded questions on dozens of issues, and referred a handful to FASB and IASB for further rulemaking or clarification.

Separately, however, the American Institute of Certified Public Accountants is operating more than a dozen industry-specific task forces looking at how the new standard will change revenue recognition in those industry sectors, where sector-specific rules in existing GAAP disappear. The AICPA posted its own update of the issues the various task forces are addressing through their processes. A table breaking out issues by industry sector says the task forces collectively are addressing 170 issues, only three of which have been taken to the Joint TRG.

While acknowledging the efforts of the volunteer task forces, Bricker aired misgivings about how the process is working, with so few of the issues they have raised being referred to the TRG. “I caution the task forces to avoid the pressure to resolve issues with judgments that are not consistent with the principles of the new revenue standard regardless of whether those judgments represent a consensus view of a task force," he said. "Such resolutions, including those that seek to avoid raising issues to the TRG in order to preserve existing reporting or to avoid a possible outcome that may not be preferred are not appropriate.”

The AICPA had no comment on Bricker’s remarks. A spokesman said multiple industry task forces are likely to issue in early November several “late-stage working drafts of revenue recognition implementation issues” for informal public comment.