The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have formally announced plans to create a joint transition resource group focused on the upcoming final converged standard on revenue recognition.
The transition group will be responsible for informing the IASB and the FASB about interpretive issues that could arise when companies, institutions, and other organisations implement the revenue recognition standard. It will solicit, analyse, and discuss stakeholder issues that apply to common transactions that could reasonably create diversity in practice.
In addition to providing a forum to discuss the application of the requirements, the transition group will provide information that will help the Boards determine what, if any, action will be needed to resolve that diversity. The group itself will not issue guidance.
The resource group will convene following the final issuance of the revenue recognition standard later this year. The group is intended to have a limited life and the primary activities of the group are planned to occur before the standard takes effect in 2017.
“Effective implementation of the revenue recognition standard is critical to its success in providing financial statement users with the information they need to make the right decisions about how to allocate their capital," says Russell G. Golden, Chairman of the FASB. "The Boards are committed to ensuring a smooth transition to the new standard, and the transition resource group is an important tool for determining any areas that will need additional guidance before the standard becomes effective in 2017.”
Hans Hoogervorst, Chairman of the IASB points out that revenue is a key performance indicator and is important to every business. "Our joint transition group will help to ensure that stakeholders are reading the words in the new revenue standard in the way that we intend that they be read.”
The transition group will consist of 10 to 15 specialists representing financial statement preparers, auditors, regulators, users, and other stakeholders as well as members of the IASB and FASB. Transition group members will be announced shortly after the final standard is issued.
Stakeholders will be encouraged to submit implementation issues to the transition group. Submissions that meet the Boards’ minimum guidelines—such as broad applicability, potential to create diversity in practice, if industry specific broad applicability to industry, etc.—will be presented by IASB and FASB staff at public transition group meetings.
Guidelines for submitting issues will be posted to the Boards’ respective websites after issuance of the final standard.