THE IFRS FOUNDATION has advised the IASB, the global accounting standard setter, to delay the implementation of new revenue recognition rules following a similar move by US counterpart FASB.
A paper prepared by staff at the IFRS Foundation, the body responsible for overseeing the work of the IASB, said the revenue recognition standard (IFRS 15) should be delayed by one year.
The move follows the decision by US standard setter FASB to give businesses an extra year to prepare for the new standard, which overhauls the way companies record revenue on their books and is one of the biggest changes to accounting rules in more than a decade.
“It is less confusing for the market if both IFRS and US GAAP preparers apply the new standard at the same time. Deferring the effective date by one year would be expected to significantly reduce the frequency of those differences,” the staff paper said.
There is also likely to be “resistance” among companies reporting under IFRS if they are required to implement the new standard before US companies are required to do so, the paper said.
The core principle of the new common global standard, which replaces the fragmented set of rules by which companies in different industries booked their revenues differently, is for companies to recognise revenues in a way that shows the transfer of good and services to customers that reflects the payment to which the company expects to be entitled.
Under the FASB’s timetable, companies will have until reporting periods beginning after 15 December 2017 to implement the standard.
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