April 1, 2015 | The FASB proposed a one year deferral of the effective date for its new revenue recognition standard ASU 2014-09, Revenue from Contracts with Customers or ASC 606 for public and private entities reporting under US GAAP. This proposed deferral is not final, however is considered to be likely and many companies have started to build this expectation into their implementation planning.
What does this mean?
The deferral means that the new standard must be adopted by public entities in their reporting period beginning after December 15, 2017. Nonpublic entities are required to adopt the new guidance in their reporting period beginning after December 15, 2018. Early adoption on the original effective dates would be allowed under the proposal.
What is the impact?
The adoption of the new revenue standard could be complex and time consuming and for many companies, may result in the need to recalculate revenue for multiple historical periods upon the date of implementation. With a deferral, companies will have an opportunity to be proactive with the implementation of this guidance which can save unnecessary costs and effort as the implementation date nears.
How can CFGI help*?
CFGI recommends that all Companies do a preliminary assessment of the impact to their business which will provide the information necessary to determine a plan of action. This high level analysis will position CFO’s with a Board-ready presentation outlining the impact to the revenue model, an assessment of organizational impact, and a recommended implementation plan and timeline.
Link to fasb.org page with deferral:
*For more information, please contact a member of our team of subject matter experts. We can assist you with the execution of this new guidance by tapping our combined knowledge and share best practices to guide you to a successful ASC 606 implementation.