New revenue standard — SEC encourages elevation of implementation issues to the FASB/IASB joint transition resource group

Published on: 25 Sep 2015

In recent weeks, James Schnurr and Wesley R. Bricker, chief accountant and deputy chief accountant, respectively, in the SEC’s Office of the Chief Accountant, have given speeches1 in which they have discussed the ongoing efforts to implement the FASB’s and IASB’s new revenue standard (issued as ASU 2014-092 by the FASB and IFRS 153 by the IASB), including the ongoing collaboration between preparers, auditors, and standard setters. In his speech before the AICPA National Conference on Banks & Savings Institutions, Mr. Schnurr reminded constituents that they will often need to use significant judgment in implementing the new revenue standard but that the ultimate goal is to ensure consistent implementation across industries. Specifically, he stated, “While industry group involvement is important, it is even more important that the issues identified at the industry group level are elevated for broader consideration and any important interpretative questions are resolved so that we maintain consistent application of the revenue recognition principles across all industries.”

In his speech at the Bloomberg BNA Conference on Revenue Recognition, Mr. Bricker stressed the importance of understanding the standard’s effect on revenue arrangements. “Some may believe that nothing has changed for their company,” he said. “That may be true, but I caution you to take this time to refresh your thinking about your arrangements with your customers. Take seriously how the change in existing revenue literature or additional guidance provided by the standard impacts your arrangements.”

Mr. Schnurr and Mr. Bricker both were concerned that the AICPA’s 16 industry task forces have elevated relatively few issues to the FASB/IASB revenue transition resource group. As Mr. Schnurr noted, “As the degree of work intensifies at the industry group level, I anticipate that a significant amount of debate may take place with respect to implementation questions, particularly scope related questions. In this regard, our office does not believe it would be appropriate for industry groups to ‘agree to disagree’ or to agree on a specific accounting treatment when there are real concerns as to whether that accounting treatment is consistent with the standard.”  He further stated, “It would be unfortunate if key questions or issues of disagreement or concern are not appropriately escalated due to concerns that, if escalated, the resolution of the accounting would change an existing practice or result in an accounting treatment that the industry did not prefer. Rather, the time is now to escalate these issues and ensure they are resolved at the appropriate level.”

Mr. Schnurr’s speech also included remarks on credit impairment, the latest thinking on IFRSs, and independent standard setters.

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1 The full text of the Schnurr and Bricker speeches is available on the SEC’s Web site.

2 FASB Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers.

3 IFRS 15, Revenue From Contracts With Customers.

New revenue standard — SEC encourages elevation of implementation issues to the FASB/IASB joint transition resource group Image

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