While a deep dive into any delay for the new revenue recognition standard won’t take place until next month, governing boards this week made solid progress toward some key revisions to the complex new converged standard.
At their joint meeting for March, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) voted in favor of proposed changes to the transition guidance in the wake of numerous implementation concerns, according to a Journal of Accountancy report.
This marks the second month in a row the two groups agreed to clarifications for the new guidance. As was the case in February, FASB’s proposed changes went further than those by the IASB.
The topic likely at the forefront of everyone’s minds – a possible deferral of the standard’s effective date – isn’t on the docket for discussion until the April meeting. While FASB is weighing a delay in response to the multitude of requests by companies for more time to change their systems and processes, the IASB has said there hasn’t been a similar clamor from those who will be using IFRS.
The following revisions, however, were approved and will be sent to staff for proposals and feedback:
- Practical Expedients upon Transition – contract modifications and completed contracts: In response to concern that frequency and extent of contract modifications may elevate complexity and costs of evaluating the modification, both FASB and the IASB agreed to propose a “use of hindsight” expedient.
- Sales Tax Presentation – gross versus net: FASB will propose a practical expedient to allow net reporting for sales tax, a revision the IASB voted not to approve.
- Revenue Recognition – noncash consideration: FASB will seek to clarify guidance for determining the measurement date for non cash consideration, another revision the IASB chose not to revise.
- Collectibility – accounting for cash received: FASB agreed to improve guidance language surrounding contracts which involve low credit quality, while the IASB chose to review further at a later meeting.