AICPA encourages private cos. to get ready for new rev rec standard
The American Institute of CPAs is urging private companies to prepare for the new revenue recognition standard as the effective date approaches.
In a new AICPA Insights blog, No more hitting the snooze button on revenue recognition, AICPA associate director of accounting standards for public accounting Kim Kushmerick explains why private companies need to stop procrastinating. Publicly traded companies are expected to be using the new standard from the Financial Accounting Standards Board, and privately held companies are supposed to start using it over the next year or two.
“Public entities are well underway with adoption of the new revenue recognition standard, as the new guidance is effective for interim and annual periods in 2018,” he wrote. “Private companies still have some time as the guidance is effective in 2019 for annual reporting periods, and in 2020 for interim periods. This is a wakeup call, and not an opportunity to hit the snooze button yet again."
Kushmerick has three main pieces of advice for companies:
- Identify company experts;
- Focus on areas with increased judgement; and,
- Review the required disclosures.
“You are running out of time to implement the FASB’s new revenue recognition standard,” he warned. “It’s important to remember this guidance supersedes the revenue recognition requirements in FASB ASC 605, 'Revenue Recognition,' and most industry-specific revenue recognition guidance.”
He also noted that FASB's new leasing and credit loss standards are coming up not far behind the revenue recognition standard.
For information and tools for implementing the standard, visit the AICPA’s revenue recognition webpage.