NEW global rules on how companies record revenue on their books have been delayed by one year after the IASB voted to defer the effective date on the revenue standard, IFRS 15.
The new revenue recognition standard will now come into force on 1 January 2018 instead of 2017 after the international accounting standard setter brought its effective date in line with US counterpart FASB, which voted in favour of delaying the standard for preparers using US GAAP earlier this year.
Both boards approved a converged set of revenue rules in 2014, aimed at improving the comparability of financial statements around the world.
The core principle of the new rules , which replaces the fragmented set of rules by which companies in different industries booked their revenues differently, is for companies to recognise revenues in a way that shows the transfer of good and services to customers that reflects the payment to which the company expects to be entitled.
Later this month the IASB will consult on proposed clarifications to the standard to help companies with implementation. The clarifications follow discussions at the Transition Resource Group (TRG), which was established by the IASB and the FASB to support companies in implementing the standard.
“The deferral will give companies more time to implement the standard in view of the clarifications that we will propose shortly. It also keeps the effective date aligned for IFRS and US GAAP,” said Hans Hoogervorst, chairman of the IASB (pictured).
Companies applying IFRS have the option to apply the standard early. The formal amendment to the standard, specifying the new effective date, is expected to be issued in September.