On the Horizon

Revenue Recognition—Effective Date

Stakeholders now have the opportunity to comment on a proposed Accounting Standards Update (ASU) deferring the effective date of the new revenue recognition standard by one year. The Exposure Draft, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued on April 29 and is open for comment until May 29, 2015.

Based on the Board’s decision, public companies would apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Private companies and not for profit organizations would apply the new revenue standard to annual reporting periods beginning after December 15, 2018.

Public companies would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2017 (that is, a public company would be required to apply the new revenue standard beginning in the first interim period within the year of adoption).

Private companies and not for profit organizations would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2019 (that is, a private company or not for profit organization would not be required to apply the new revenue standard in interim periods within the year of adoption).

The FASB voted to propose these deferrals based on issues raised by companies and other organizations most affected by the new standard.
Additionally, the Board has decided to permit all types of organizations to adopt the new revenue standard early, but not before the original public company effective date (that is, annual periods beginning after December 15, 2016).

A public company would apply the new revenue standard to all interim reporting periods within the year of adoption. A private company or not for profit organization would not be required to apply the new revenue standard in interim periods within the year of adoption.

The FASB voted to propose these deferrals based on issues raised by companies and other organizations most affected by the new standard. These issues include the timing of the proposed implementation guidance, the lack of software solutions for companies that may be implementing new systems, and the issuance date of the final standard.

EITF—Employee Benefit Plans


In June, the Emerging Issues Task Force (EITF) plans to redeliberate its proposed improvements to employee benefit plans. Issued for public comment on April 23, 2015, the proposed EITF consensus aims to simplify the accounting requirements for all organizations—public, private, and not for profit that offer employee benefit plans.

The EITF is looking at the issue based on feedback from FASB stakeholders, who have said that some existing requirements are outdated and unnecessary.
The EITF is looking at the issue based on feedback from FASB stakeholders, who have said that some existing requirements are outdated and unnecessary. Some have expressed concerns that financial reporting requirements in this area are too complex, with too many required disclosures.

In response to this feedback, the FASB made it a priority to work on accounting changes that could be completed most efficiently and would be most impactful. It then directed the EITF to look to eliminate non-useful information from the current accounting guidance.

As part of this project, the EITF has worked closely with the AICPA Employee Benefit Plan Expert Panel, the AICPA Employee Benefit Plan Audit Quality Center Executive Committee, and a new working group to propose solutions that may modify Topic 820, Fair Value Measurement, plan accounting asset disclosures and measurement simplification for fully benefit-responsive investments.

The FASB is cognizant that many employee benefit plan administrators will issue financial statements in October 2015, and aims to provide a simplified approach to stakeholders that they will be able to apply this year.

Not-for-Profit Exposure Draft


The proposed guidance is intended to improve the information provided in not-for-profit financial statements and notes to financial statements.
In May, the FASB will host an educational webinar that provides an in-depth look at the FASB’s proposed ASU, Presentation of Financial Statements of Not-for-Profit Entities. The webinar is scheduled for Tuesday, May 12, from 1:30 to 3:10 p.m. EDT.

FASB stakeholders have until August 20, 2015 to provide comment on the proposed guidance, which is intended to improve the information provided in not-for-profit financial statements and notes to financial statements. It focuses on enhancing current net asset classification requirements and information presented about a not-for-profit organization’s liquidity, financial performance, and cash flows.

During the past year, the FASB has conducted outreach at several conferences and roundtables and plans to continue to connect with nonprofit stakeholders to gain insight on the proposed changes.