Companies behind schedule on revenue recognition and leasing standards
Both public and private companies continue to delay implementing the revenue recognition and lease accounting standards, according to a new report from PricewaterhouseCoopers.
The report follows up on an earlier Q2 survey released in June by PwC, which similarly found companies needing to make better progress (see Companies still lagging on rev rec and leasing standards).
With only six weeks left until January when the Financial Accounting Standards Board's new leasing standard takes effect for public companies, just over 75 percent of the public companies surveyed by PwC have reached the halfway mark to implementing the new lease reporting system, and only 4 percent are complete. However, nearly one-quarter of all public respondents do not expect or doubt their ability to go live with their lease reporting system changes by the effective date set by FASB.
Privately held companies get an extra year to implement the leasing standard. But while private companies have more time until their deadline, 28 percent still have not yet started assessing the necessary updates, and only 2 percent have completed the process entirely. The report found that 44 percent of respondents with 1,000 or more leased assets or contracts expect implementation of the leases standard to cost $1 million or more, and 25 percent anticipate the same for implementing the revenue recognition standard.
The rev rec standard has already taken effect for public companies and become effective for private companies next year. But 45 percent of non-public companies surveyed by PwC have still not finished assessing the impact of the standard, including 17 percent who have not yet started. In contrast, 88 percent of the public company respondents to the survey acknowledged the effective date for the standard has already passed, but only 77 percent said they have finished implementing the rev rec standard. Still, that’s an improvement from the survey results in the second quarter of the year, when only 66 percent of the public company respondents said they have finished implementing the standard.