In a move that had been in the works for a while, the Financial Accounting Standards Board (FASB) officially voted to delay its new revenue recognition standard by one year.
Financial statement preparers had complained that there was not enough time to implement some of the changes required by the new standards. Challenges cited by the Journal of Accountancy article linked above include the delayed issuance of the standard (it had been delayed several times before being issued in May 2014), the timing of the proposed changes, a lack of available IT solutions, and difficulty implementing internal controls amid the uncertainty.
Public companies as well as some employee benefit plans and not-for-profit organizations now must use the new revenue recognition rules for annual periods beginning on or after December 15, 2017. For a company reporting on the calendar year, this means 2018 will be the first year for which this is effective. All other entities must apply the new guidance one year later.
We’ve had our eyes on this issue throughout its evolution and will continue to keep you posted. If you have any questions about how this new standard might affect you, give us a call to see how we can help.