A group formed by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) that will analyze issues arising from companies’ implementation of the new accounting standard on revenue recognition will meet for the first time in July.
Both standard-setting boards said on Tuesday that the Joint Transition Resource Group for Revenue Recognition will meet twice this year and four times in 2015. The first meeting is scheduled for July 18. All meetings will be public and co-chaired by the vice chairmen of the FASB and the IASB.
The 19-member resource transition group will inform the FASB and the IASB about potential implementation issues that could arise when companies and organizations implement the new converged revenue recognition standard, which was released on May 28. It will also provide stakeholders with an opportunity to learn about the new accounting rule from others involved with implementation. However, the group will not issue guidance.
The new rule standardizes how companies should recognize revenue from contracts with customers in financial statements under both US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). It also will result in enhanced disclosures about revenue, provide guidance for transactions like contract modifications that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements.
Companies using IFRS will be required to apply the standard for reporting periods beginning on or after January 1, 2017. Early application is allowed for companies that use IFRS.
The standard will take effect for US public companies for annual reporting periods beginning after December 15, 2016, including interim reporting periods. For nonpublic companies in the United States, the standard takes effect for annual reporting periods beginning after December 15, 2017, and interim and annual reporting periods thereafter.
"The fact that we managed to stay converged with our colleagues of the FASB is very important, and we intend to stay converged", IASB Chairman Hans Hoogervorst said during a speech at the IFRS Conference in Singapore on May 29. "This is one of the reasons why we created a joint transition group, which will guide preparers in the implementation of the new revenue standard. We expect the transition group to answer the vast majority of the questions that inevitably come up with market participants. Should more fundamental questions be raised, they will be referred to the boards."
The FASB and the IASB announced last July that they intended to create a transition resource group that would meet once the converged standard on revenue recognition was released.
Members of the group include financial statement preparers, auditors, and users representing a wide spectrum of industries, geographical locations, and public and private companies and organizations.
Stakeholders can submit a potential implementation issue for discussion at transition resource group meetings. The IASB and the FASB will evaluate each submission and prioritize the issues for discussion during the meetings.
The FASB and the IASB will present the webcastIN FOCUS: Revenue from Contracts with Customers at 10 a.m. EDT (3 p.m. British Summer Time) on June 5. The live, one-hour broadcast will provide a high-level overview of the new guidance on revenue recognition.
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.