According to this article in Compliance Week, the FASB is considering deferring the effective date of the new revenue recognition standard. A decision will be made “no later than early second quarter” on whether to propose a delay. The article reports that, as FASB staff conducted site visits at various companies to assess readiness, there have been many requests for deferral of the effective date.  According to the article, however, companies that have not even made the effort to begin the process of adoption have not received much sympathy if they request a delay. 

The new standard involves a five-step process and extensive new disclosures. See this FASB summary and this News Brief. The new standard will apply to interim and annual periods that begin after December 15, 2016. One decision for companies approaching the transition to the new standard is whether to elect a retrospective approach, applying the standard to both current and prior years (e.g., 2016 and 2015 revenues in addition to 2017) or to take the cumulative approach, applying the standard only to 2017, which would involve some adjustments to deferred amounts as well as disclosures regarding the absence of  comparability.  Fortunately, for companies electing the retrospective method, the SEC will not require five years of retrospective data for the Selected Financial Data table.

Implementation of the new standard has turned out to be a much more complex and involved process than many had initially anticipated, requiring a multi-departmental approach. Companies will need to consider how the new standard may affect business activities and require the collection of information beginning in 2015. At the PLI Securities Regulation Institute last week, former director of Corp Fin, John White, identified a number of issues that companies will need to consider and may need to address, including (once again paraphrasing):

• What will be impact on revenue of the new standard?
• What changes need to be made to internal control over financial reporting?
• What systems will need to be modified?
• Where does the company use financial metrics (for example, loan agreement covenants, compensation plans and agreements, sales agreements, other contracts) and how will those need to be revised?
• With regard to sales agreements, are there ways that the company will be able to – permissibly – maximize the results it seeks to achieve?
• What additional disclosures will be required?

FASB’s Joint Transition Resource Group has received and published inquiries regarding 27 implementation issues that it plans to address, so that may become a useful resource.