What the Latest FASB Deferral Means for You
On July 9, 2015 the Financial Accounting Standards Board voted to defer the effective date of ASU 2014-09 on Revenue from Contracts with Customers (Codification Topic 606). The original revenue standard was finalized in May 2014. The exposure draft to defer the effective date of the revenue standard was issued on April 29, 2015 and received 67 comment letters, many in support of the deferral for varying reasons:
- Need for clarification of significant interpretation issues among various industry groups
- Time to make necessary internal control and information technology changes
- Additional time to properly review customer contracts, particularly for industries with a large volume of customers
- Lack of implementation-ready software solutions
- Complexity of running parallel revenue recognition one year before adoption to allow for retrospective adoption
The recently approved ASU has deferred the effective date of the revenue standard by one year for all entities. Public business entities, certain not-for-profit entities, and certain employee benefit plans will apply the new revenue standard to annual reporting periods beginning after December 15, 2017, while all other entities will apply the standard to annual reporting periods beginning after December 15, 2018. Early adoption is still permitted, however not before the original effective date of annual periods beginning after December 15, 2016.
If you have further questions regarding how ASU 2014-09 will impact you and your organization, have a Barnes Dennig representative reach out to you today here.