FASB soon to Release Revenue Recognition Standard
An accounting standard dealing with the matters related to recognition of revenue is in the final stages and soon to be released as part of the International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles.
The Financial Accounting Standards Board (FASB) voted on November 06, 2013 to move ahead with the preparation of final accounting standard on recognition of revenue. The standard is scheduled to be issued the first quarter of the coming year.
The FASB and the International Accounting Standards Board (IASB) has been working, since 2002, on the development of a final converged accounting standard on recognition of revenue. These two standard-setters discussed the technical issues regarding the joint revenue recognition project at the start of this month and then on November 6 the FASB voted for a go-ahead on the final stages of the project.
The staff of the FASB is now authorized to prepare and issue a ballot draft of the new accounting standard. The draft will then be submitted to the board for review and final approval. If the draft is approved by the board, the final standard will then be published as part of the FASB Accounting Standards Codification. The IASB is also expected to hold its vote to approve the balloting of the standard in the coming days of the current month.
Russel Golden, Chairman of the FASB, stated in a written statement that the new standard will not only improve but also substantially converge the guidance on how revenue is recognized in the financial statements. On November 6 he said "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".
For the public companies, the new revenue recognition standard is expected to go into effect in 2017, and for the private companies it is expected to go into effect in 2018.