New research from Grant Thornton finds that only 37% of respondents believe that existing accounting standards on revenue recognition need to be improved or replaced, despite a documented history of high-profile corporate revenue recognition problems.

In the United States, revenue recognition issues resulted in 10% of reported restatements in 2010 and the United Kingdom’s accounting regulator has challenged several companies’ revenue recognition policies and disclosures.

Underlying the global findings, there are some significant regional variations. Support for change was notably low in the U.S. (30% believe that improvement is needed and 72% believe it will lead to increased complexity), the U.K. (33% believe improvement is needed and 44% believe it will lead to increased complexity), and South Africa (32% believe that improvement is needed and 64% believe it will lead to increased complexity).

Support was greatest in India (59% believe improvement is needed), the ASEAN countries (56% believe that improvement is needed) and Latin America (48% believe that improvement is needed).

Only 35% were aware of the upcoming revenue recognition changes, findings consistent with the recent

Grant Thornton commissioned lease accounting global survey, which found only 45% aware of the pending changes in reporting leases.

“Revenue is a key performance measure for every business and a single, global accounting standard in this area is critical," says Ed Nusbaum, CEO of Grant Thornton International. “Although some argue that the current standards aren’t broken, we do think there are serious problems."

According to Nusbaum, the two main IASB standards are based on different principles and lack guidance in important areas such as multiple element arrangements. The U.S. literature suffers from the opposite problem of excessive guidance - much of which is specific to particular industries.

The regional variations in attitude to the Boards’ proposals are no doubt affected by these different starting points.

“There is understandable concern about increased cost and complexity, but we believe that the IASB and FASB are moving in the right direction, and we’re pleased they’re moving together. The decision to re-expose is also very positive.”

The IASB and FASB have amended their proposals to simplify application and reduce unnecessary disruption to established accounting practices.

For example, the latest exposure draft is expected to result in most construction and services sector businesses continuing to recognise revenue as they perform under a contract, much more in line with current practice. The Boards have added practical expedients to simplify application in some areas, including contracts with embedded financing and onerous obligations.