SEC to Give Companies a Little More Time on Revenue Recognition Implementation

By:
Chris Gaetano
Published Date:
Nov 15, 2017
Deadline alarm clock

The Securities and Exchange Commission said that it will go a little easy on companies working to implement the new revenue recognition rules, as it won't issue comment letters regarding the company's compliance with the new standards, at least during the beginning stages, according to the Wall Street Journal

The new standards, formally approved in 2014, replaces the myriad industry-specific guidance with a unitary model based on the identification and completion of discrete "performance obligations." It was conceived as part of the convergence project headed by the Financial Accounting Standards Board and International Accounting Standards Board. Several surveys since its approval indicate that companies are generally unprepared to fully implement the standards, even as they draw closer to the Dec. 15, 2017 effective date (which, itself, had been delayed a year from 2016 to give companies more time). 

This SEC was quick to stress, however, that companies should not interpret this as a blank check: it expects compliance to improve in 2018, and that if something is clearly wrong or omitted, then it will absolutely still issue a comment letter. Still, this should come as a relief to many companies that are still trying to work out how the new standards will affect them and how they will rework their systems to accommodate their effects. The Journal also noted that the SEC itself needs to familiarize itself with the new rules too, as it is fielding 10 to 15 percent more inquiries about revenue recognition this year than last, two-thirds of which are internal. 

Click here to see more of the latest news from the NYSSCPA.