Both public and private companies are still dragging their heels on implementing some of the new accounting standards, according to a new survey, even though the effective date of adoption is already here for many companies, and approaching soon for the rest.

The survey released Monday by PricewaterhouseCoopers of more than 600 financial executives found that more than half of privately owned companies have not yet assessed the impact of revenue recognition changes.

The revenue recognition standard took effect for publicly traded companies last December and will take effect for privately held companies at the end of this year. The PwC survey found that one-third of public company respondents were still at work implementing the new revenue recognition standards, however, which included non-calendar year-end companies and those doing post-effective-date work. However, 57 percent of non-public respondents were not yet finished with assessing the impact. One-third of the public companies surveyed reported having six or more full-time-equivalent employees focused on implementing revenue recognition, with 15 percent saying they have teams of more than 10 people working on implementing the standard.

“The public companies are further along and the non-public companies are not as far along, but they also had a later implementation date,” said PwC partner Chad Kokenge.

The lease accounting standard takes effect in December 2018 for public companies and December 2019 for private companies. But nearly one-third of public companies are unsure or do not believe they will go live with system changes by the lease accounting effective date, according to the PwC survey. More than half of public company respondents anticipate making significant leasing system changes, increasing to 63 percent for public respondents with $1 billion in revenue, and 73 percent overall for respondents with more than 1,000 leased assets. Of the public companies that expect to make significant changes, nearly one-third of the survey respondents were unsure or did not think they would go live with their system changes in time for the effective date of the new standard. Meanwhile, non-public companies that have until 2020 to comply with the new lease standards are just getting started with implementation. Nearly half of public companies believe leasing implementation costs will exceed $500,000.

“The status is not as far along in the process, and the survey respondents reflect that, for the public companies and also the non-public,” said Kokenge.

Lease accounting implementation status

The reasons cited for the lag in adopting the new accounting standards varied. “There are a lot of processes that they have to get through,” said Kokenge. “The survey respondents also noted that there is difficulty in various factors: process changes, data abstraction, resources and just the volume of information they have to get through to implement it.”

Accounting firms may be in a position to help companies get ready for the new standards. “Most accounting firms have some capacity to help, but it depends upon whether they’re audit clients or non-audit clients in terms of the level of services they need performed,” said Kokenge. “But I do anticipate that many companies will look to outside providers to help to some degree.”

In contrast to the revenue recognition and leasing standards, many companies are eager to adopt another new FASB standard, on hedge accounting, and some are even electing to adopt it early. A majority of respondents to the PwC survey said they already have or expect to adopt new hedge accounting measures this year. More than half also expect their hedging strategy to change in some way, such as increasing their use of hedging or applying hedge accounting to additional risk management strategies.

Kokenge has some advice for companies still struggling to implement all the new standards. “It would depend upon a company’s particular circumstances, but I would say the survey results in a nutshell reflect that the effort is difficult, or more difficult perhaps than it was anticipated by companies,” he said. “If you are facing adoption, I recommend you get started because once you get into it you might find out it’s more than you anticipated.”

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.