Financial statement preparers may learn more Wednesday about a potential deferral of the effective date of the converged revenue recognition standard that was issued by FASB and the International Accounting Standards Board (IASB).
FASB will hold further discussion Wednesday about a possible delay, according to a meeting notice posted on the board’s website.
The standard is scheduled to take effect for reporting periods beginning after Dec. 15, 2016, for U.S. public companies, or reporting periods beginning on or after Jan. 1, 2017, for companies that use IFRS.
But shortly after the standard was released in May of last year, some financial statement preparers began questioning whether the effective date gave companies enough time to make their transition to the standard.
Companies choosing a full retrospective transition would have needed to start capturing data by Jan. 1, 2015, to demonstrate comparability.
Paul Stephens, senior vice president and controller of AT&T, wrote to FASB in June to say that the timing of the release of the standard, coupled with the length of the company’s contracts with customers, would make it very difficult to provide some of the information required.
“We believe both preparers and users of financials will benefit from an extension of the effective date and greater utilization of the full retrospective method of implementation,” Stephens wrote.
Based on such feedback, FASB and its staff have been researching the possibility of a deferral of the effective date. The IASB has said it has not received as much feedback from its constituents seeking a deferral.
But during a joint meeting of the boards last month, IASB member Patrick Finnegan predicted a delay.
“If a company was going to apply this standard and restate three years and try to be ready … they’d have to know the answers to these questions on [Jan. 1, 2015],” Finnegan said. “And they’re not going to know the answers. So it’s pretty obvious that there’s going to have to be a deferral in light of all these potential changes we’re talking about.”
The IASB also is expected to hold discussions soon on a possible deferral of the effective date.
—Ken Tysiac ( firstname.lastname@example.org ) is a JofA editorial director.