By Jason Bramwell
A revenue recognition standard for US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) is close to being finalized.
On November 6, the Financial Accounting Standards Board (FASB) voted to move forward with preparing the final standard on revenue recognition, which is slated to be issued during the first quarter of 2014.
The board's decision on Wednesday follows the completion last week of the technical discussion of the joint revenue recognition project by the FASB and the International Accounting Standards Board (IASB). Since 2002, the two standards-setting groups have been working on developing a final converged standard for revenue recognition.
FASB staff was authorized to prepare and issue a ballot draft of the standard, which will be submitted to the board for final approval. Once approved, the final standard will be published as part of the FASB Accounting Standards Codification. The IASB is expected to hold its vote to confirm balloting of the standard later this month.
FASB Chairman Russell Golden said in a written statement on November 6 that the standard both improves and substantially converges guidance on how revenue is recognized in financial statements.
"Today's vote represents a major milestone in our eleven-year effort to create greater comparability in an area of financial reporting that affects all industries", he said.
The final revenue recognition standard will likely go into effect for public companies in 2017 and in 2018 for private companies.