The Financial Accounting Standards Board (FASB) proposed a one-year deferral of the effective date for its new revenue standard for public and nonpublic entities. Under the proposal, the standard would be effective for public entities with annual reporting periods beginning after December 15, 2017 and the first interim period within the year of adoption. Nonpublic entities would be required to adopt the new standard for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019.
The proposal also would permit both public and nonpublic entities to adopt the standard as early as the original public entity effective date (i.e., annual reporting periods beginning after December 15, 2016 and interim periods within the year of adoption). Early adoption prior to that date would not be permitted.
The FASB plans to issue an exposure draft on the proposal and expects to seek public comment with a 30-day comment period. The IASB is expected to discuss its standard’s effective date later this month.
A number of companies have been actively lobbying for deferral. Additionally, there are a number of implementation questions which have been arising since the standard was released. Accordingly, it appears the FASB has determined that additional time would ultimately result in a more successful implementation.
While some may consider this deferral as an opportunity to put on hold implementation projects, we do not believe this may be the best decision. As discussed in previous posts, the new revenue standard presents many challenges which may have a broad organizational impact. We recommend companies to monitor standard setting activities. We also encourage companies to adjust project timelines, but to continue to move forward with assessment/implementation plans.