The introduction of the revenue recognition standard is to be delayed for one year following discussion between global accounting standard setters. The International Accounting Standards Board (IASB) has confirmed that it plans to defer the effective date of the new revenue standard, IFRS 15, Revenue from Contracts with Customers, for one year to 1 January 2018
The new standard was issued jointly by the IASB and the US Financial Accounting Standards Board (FASB) in May 2014 with the effective date originally set at 1 January 2017.
The IASB says it will consult on the proposed deferral of the effective date by one year before it is confirmed, as is required by its due process. The consultation will have a comment period of a minimum 30 days and is likely to be issued in May 2015. Early application of the standard would still be permitted.
The reason given for deferring the effective date is that the IASB is planning to issue an Exposure Draft with proposed clarifications to the standard, stemming from the joint Transition Resource Group (TRG) meetings.
The regulator said it wanted to remove potential uncertainty about what IFR 15 would look like if these amendments are accepted.
It also wants to keep the effective date of the IASB and FASB revenue standards aligned.
The FASB voted to propose a one-year deferral of the effective date of the standard earlier this month.
The decision means that a recommendation from the European Financial Reporting Advisory Group (EFRAG) that the European Commission adopts IFRS 15 without deferral of the effective date will now be superseded as the implementation date will be adopted ‘with the effective date set by IASB’.
Essential reading
To find out more about the revenue recognition standard, read Revenue recognition: the countdown to IFRS 15 by Andrew Davies, accounting lead partner at EY
