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Revenue Standard Slated for May 28 Publication

May 23, 2014

The FASB and IASB say they will publish their converged standard for revenue recognition in the last week of May. The boards plan to announce the participants in a 10-15 member group that will advise the boards, companies, and auditors on issues that arise with adopting the new standard.

The FASB will publish Accounting Standards Update (ASU) No. 2014-09 (ASU) No. 2014-09, Revenue from Contracts with Customers, on May 28, 2014, a spokeswoman for the accounting board confirmed.

The publication will coincide with the IASB’s release of IFRS 15, Revenue from Contracts with Customers, the IASB said in a published statement. Within about a week of the standards’ publication, the boards plan to name the members of a group of external advisers to help companies apply the standards. The panel will include 10-15 representatives from companies and audit firms, and staffers from the SEC Chief Accountant’s office, the PCAOB, and AICPA will act as observers. Representatives from the International Accounting and Auditing Standards Board and the International Organization of Securities Commissions will also attend its meetings, the first of which is expected to take place in July.

The revenue standard is based upon the draft guidance in the FASB’s Proposed ASU No. 2011-230 and the IASB’s Exposure Draft (ED) No. 2011-6, which were issued in 2011. The project has been described as the “crown jewel” of accounting convergence by IASB Chairman Hans Hoogervorst.

Given the massive change the standard is expected to introduce to financial reporting, many companies have watched its development with some concern. The single revenue standard will replace an estimated 180 pieces of guidance in U.S. GAAP and strengthen the revenue principles in IFRS, and U.S. companies have said they’re concerned that the erasure of so many old standards will lead to some significant issues with financial reporting. Companies in the U.S. and overseas have lobbied the boards for help with implementing the new accounting method.

The accounting boards say the new standard will produce a uniform way for all companies to report revenue and make it easier for analysts and investors to understand and compare the results of different businesses across industries and from different countries.

At a May 1 conference at Baruch College in New York, Daniel Murdock, a deputy chief accountant with the SEC, said the agency would be “evaluating how the application of the standard evolves over time.” The agency still hasn’t determined what it would do with its revenue guidance, much of which is in the form of Staff Accounting Bulletins.

“It’s a very fair presumption to think we’d eliminate most, if not all, of our guidance,” Murdock said. “Again with the caveat that as practice evolves, we’ll see if there’s guidance that is necessary.”

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