PwC Survey Finds Companies Still Struggling to Implement Revenue Recognition Standard

By:
Chris Gaetano
Published Date:
Oct 26, 2016
By Arivumathi - Own work, CC BY-SA 3.0

Despite the fact that it goes into effect next year, a recent survey of 700 corporate executives by PricewaterhouseCoopers has found that many companies are still dragging their feet on implementing the FASB's new revenue recognition standards. While the survey found varying levels of readiness among different types of companies, those actually implementing the new standards were squarely in the minority.

Across all companies, 22 percent have done nothing at all so far, 65 percent are still in the middle of assessing how they will implement the new standards, and 13 percent are actually doing it. The picture looks a little better when considering only public companies, with only 8 percent having done nothing, contrasted against 17 percent having begun implementation and 75 percent still in the assessment stage. Among private companies, however, nearly half—47 percent—haven't done anything to prepare for the new standards, followed by 46 percent who were still assessing and 7 percent who are implementing them. 

The results are a slight improvement, however, from another survey on the matter conducted by KPMG in June. In that poll, drawn from 160 companies (most of which were public), found that 71 percent were still in the assessment stage, 7 percent were in the middle of implementing, and 8 percent had done no work at all so far. When asked why they were having such problems with implementation, most respondents said they had other competing priorities that needed more attention, though they also mentioned there were constraints on human and financial resources. 

The new standards were a centerpiece of the convergence project between the FASB and the International Accounting Standards Board (IASB), and it intended to be more or less translatable between the two systems. The new standards replace the myriad industry-specific accounting standards in U.S. GAAP with a singular model based on the recognition and fulfillment of performance obligation contracts. Since its approval in 2014, it has been subject to several further tweaks. Its effective date was delayed by a year to give companies more time to prepare, and technical modifications were made to better account for intellectual property and licensing agreements. In September the FASB released another exposure draft with further technical corrections and improvements to the standards. 

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