Jul 26th 2013
By Jason Bramwell
A joint group created by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) will be tasked to help organizations transition to the upcoming final converged standard on revenue recognition, the two standards-setting groups announced July 26.
The transition resource group – which will be comprised of ten to fifteen specialists representing financial statement preparers, auditors, regulators, users, and other stakeholders as well as members of the FASB and the IASB – will be responsible for informing the FASB and the IASB about interpretive issues that could arise when companies, institutions, and other organizations implement the revenue recognition standard.
It will solicit, analyze, and discuss stakeholder issues that apply to common transactions that could reasonably create diversity in practice. In addition to providing a forum to discuss the application of the requirements, the transition resource group will provide information that will help both boards determine what, if any, action will be needed to resolve that diversity. The group itself will not issue guidance.
"Effective implementation of the revenue recognition standard is critical to its success in providing financial statement users with the information they need to make the right decisions about how to allocate their capital," FASB Chairman Russell Golden said in a written statement. "The boards are committed to ensuring a smooth transition to the new standard, and the transition resource group is an important tool for determining any area that will need additional guidance before the standard becomes effective in 2017."
The transition resource group will convene following the final issuance of the revenue recognition standard later this year. The group is intended to have a limited life, and the primary activities of the group are planned to occur before the standard takes effect in four years.
Members of the group will be announced shortly after the final standard is issued.
Stakeholders will be encouraged to submit implementation issues to the transition resource group. Submissions that meet the boards' minimum guidelines – such as broad applicability and the potential to create diversity in practice – will be presented by FASB and IASB staff at public transition group meetings. Guidelines for submitting standards will be posted on the FASB website and the IASB website after the final standard is issued.
"Revenue is a key performance indicator and is important to every business," IASB Chairman Hans Hoogervorst said. "Our joint transition group will help to ensure that stakeholders are reading the words in the new revenue standard in the way that we intend that they be read."