The majority of companies admit they are behind on implementing the new revenue recognition standard from the Financial Accounting Standards Board, according to a new survey, despite a delay of the effective date by one year.
FASB and the International Accounting Standards Board released a long-awaited converged revenue recognition standard in May 2014, but later decided to extend the date it takes effect by one year to give companies more time to implement it.
However, according to a new
Nearly 80 percent of the public companies surveyed indicated that they have not completed an assessment of the impacts of the new revenue recognition standard.
The respondents indicated their revenue recognition implementation efforts are hampered by competing internal business priorities, human resources constraints, as well as financial limitations; our experts are concerned that companies are seriously underestimating the time needed and associated costs to effectively comply. While two-thirds believe implementation costs will total under $1 million, 17 percent foresee spending between $1 million and $2.5 million, and for 16 percent, up to $20 million.
“Organizations are running short on time, and need to turn greater focus toward their revenue recognition implementation efforts to meet FASB’s deadline,” said Steve Thompson, KPMG’s Advisory lead for Revenue Recognition, in a statement. “It is concerning that more companies have not completed their assessment activities, which is a fairly straightforward step – as compared to designing and implementing system changes that can easily take more than a year. Some companies appear to be underestimating the time, effort and resources needed to effectively comply with the standard.”
Another recent survey, in which Deloitte polled 5,400 financial and accounting professionals, found the majority of companies are also unprepared for FASB’s new leasing standard (see
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