No. 2015-58
13 August 2015
To the Point
FASB — final guidance
FASB defers the new revenue
standard by one year
All entities will be
able to early adopt
the new standard
as of the original
public entity
effective date.
What you need to know
•
The FASB issued an Accounting Standards Update to defer by one year the effective
dates of the new revenue recognition standard for both public and nonpublic entities
reporting under US GAAP.
•
Early adoption will be permitted for all entities but not before the original public entity
effective date.
•
The IASB also recently decided to defer its standard by one year and is expected to
issue an amendment to IFRS 15 soon to finalize the change.
Overview
The Financial Accounting Standards Board (FASB or Board) issued an Accounting Standards
Update (ASU) to defer by one year the effective dates of its new revenue recognition standard
for public and nonpublic entities 1 reporting under US GAAP.
As a result, the standard will be effective for public entities for annual reporting periods
beginning after 15 December 2017 (2018 for calendar-year public entities) and interim
periods therein. Nonpublic entities will be required to adopt the standard for annual reporting
periods beginning after 15 December 2018, and interim periods within annual reporting
periods beginning after 15 December 2019.
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Public and nonpublic entities will be permitted to adopt the standard as early as the original
public entity effective date (i.e., annual reporting periods beginning after 15 December 2016
and interim periods therein). Early adoption prior to that date will not be permitted.
The International Accounting Standards Board (IASB), which developed its new revenue
standard jointly with the FASB, also recently decided to defer the standard by one year, which
would keep the new standards’ effective dates converged under IFRS and US GAAP. The IASB
plans to issue an amendment to IFRS 15 soon to finalize the change in effective date.
The FASB deferred the effective date, in part, to address constituents’ concerns about how long
it would take to implement changes to information technology systems and the current status of
standard setting activities. The FASB also noted in the ASU that the deferral compensates for
the delay in the issuance of the original revenue standard. Most constituents who submitted
comment letters on the FASB’s proposal expressed support for a deferral of the effective dates.
New effective dates
This table illustrates the new effective dates for public and nonpublic entities with calendar
year ends.
Year end
Mandatory adoption date
Early adoption date(s)
1 January 2018 effective date,
first present in 31 March 2018
interim financial statements
1 January 2017 effective date, first
present in 31 March 2017 interim
financial statements
Public entities
31 December
Nonpublic entities
31 December
1 January 2019 effective date,
first present in the financial
statements for the year ended
31 December 2019
1 January 2017 effective date, first
present in 31 March 2017 interim
financial statements or first present in
the financial statements for the year
ended 31 December 2017
OR
1 January 2018 effective date, first
present in 31 March 2018 interim
financial statements or first present in
the financial statements for the year
ended 31 December 2018
OR
1 January 2019 effective date, first
present in 31 March 2019 interim
financial statements
2 | To the Point FASB defers the new revenue standard by one year 13 August 2015
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How we see it
• Deferring the effective dates should provide a more orderly transition for entities that
need more time to implement the standard.
• Companies should continue to work on implementation. They should also monitor
developments as the FASB discusses possible amendments to the standard that are
intended to clarify and simplify the guidance.
• Securities and Exchange Commission (SEC) registrants should continue to make
disclosures about the effects of the new standard as discussed in SEC Staff Accounting
Bulletin Topic 11.M. The SEC staff expects entities to disclose the transition method they
plan to use once they select it and to provide more detail in their disclosures over time.
Endnote:
1
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The term public entities refers to public business entities, not-for-profit entities that have issued or are conduit
bond obligors for securities that are traded, listed or quoted on an exchange or an over-the-counter market and
employee benefit plans that file or furnish financial statements with or to the SEC.
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3 | To the Point FASB defers the new revenue standard by one year 13 August 2015