The Financial Accounting Standards Board voted Wednesday to move forward with preparing a final standard on revenue recognition that is expected to be issued during the first quarter of 2014.
The decision comes on the heels of the completion last week of the technical discussion of the joint project by the FASB and the International Accounting Standards Board. Wednesday’s vote authorizes the FASB staff to prepare and issue a ballot draft of the standard. The ballot draft will be submitted to the FASB for final approval.
Once it is approved, the final standard will be published as part of the FASB Accounting Standards Codification. The IASB plans to hold its own vote to confirm balloting of the standard later this month.
“The FASB will issue a standard that both improves and substantially converges guidance on how revenue is recognized in financial statements,” FASB chairman Russell G. Golden said in a statement. “Today’s vote represents a major milestone in our 11-year effort to create greater comparability in an area of financial reporting that affects all industries.”
The final revenue recognition standard is expected to take effect for public companies in 2017 and for private companies in 2018.
The final standard had been expected to be issued earlier this year but was pushed back as FASB and the IASB continued discussions over tweaks to the converged standard. The two boards are still working on their other major convergence projects: leasing, financial instruments and insurance contracts. Golden provided an update on the status of those projects during a speech last week (see FASB Chairman Golden Plots Path Forward for U.S. GAAP). FASB hopes to complete the leasing and financial instruments standards next year, and the insurance standards sometime afterward.
For more information on revenue recognition and other standards, visit www.fasb.org.
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