IASB Votes to Delay Revenue Standard Start Date by One Yearby
Nearly two weeks after the Financial Accounting Standards Board (FASB) voted to defer the effective date of the new revenue recognition standard by one year for organizations that use US accounting rules, the International Accounting Standards Board (IASB) followed suit for entities that use global accounting rules.
The IASB on July 22 agreed to push back the effective date of the revenue standard, IFRS 15, Revenue from Contracts with Customers, to Jan. 1, 2018. The board's action aligns the standard's start date for users of International Financial Reporting Standards (IFRS) with financial statement preparers who follow US Generally Accepted Accounting Principles (GAAP).
Companies applying IFRS have the option of adopting the revenue recognition standard early. Entities using US GAAP may also adopt the standard early, but not before the original effective date of Jan. 1, 2017.
The IASB expects to issue a formal amendment to the standard, specifying the new effective date, in September. The FASB expects to issue its final Accounting Standards Update formally amending the effective date by the end of the third quarter of 2015.
The FASB and the IASB officially issued the converged standard on the recognition of revenue from contracts with customers in May 2014. The new guidance standardizes how companies should recognize revenue in financial statements under both US GAAP and IFRS.
On April 1, the FASB made the recommendation to delay the standard for one year after several companies expressed concern that they would not have enough time to update their systems and processes before the rule changes were scheduled to take effect in 2017.
The US standard-setting board voted on July 10 to defer the standard's effective date by one year.
Later this month, the IASB will publish some proposed clarifications to the standard to help companies with implementation. These clarifications are a result of recommendations made by the Transition Resource Group, which was established by the IASB and the FASB to support companies in implementing the standard.
âThe deferral will give companies more time to implement the standard in view of the clarifications that we will propose shortly. It also keeps the effective date aligned for IFRS and US GAAP,â IASB Chairman Hans Hoogervorst said in a written statement.