Most private companies have not adopted new revenue rules; are unlikely to adopt lease rules on time.
Most private companies have not adopted new revenue rules; are unlikely to adopt lease rules on time. Most private companies have not yet started to adopt new revenue accounting rules that took effect in January 2019 for that sector, nor do they plan to adopt lease accounting by its 2020 effective date, according to advisory discussions by FASB's Private Company Council (PCC). The PCC's survey revealed that only 1% of private companies have completed adoption of Accounting Standards Codification (ASC) Topic 606, "Revenue from Contracts with Customers"; 10% have made significant progress, 37% have recently started, and 52% have not yet started. The adoption lag might be due to change fatigue stemming from controllers and CFOs juggling multiple demands, PCC members said during a June 24 meeting. "I think the change fatigue is more encompassing than just that GAAP changes; it's going to be whether it's the tax, regulatory changes, technology, everything," said Jeremy Dillard, the technical standards partner with CPA firm SingerLewak LLP in Los Angeles. "Most of the clients I'm dealing with in the middle-market space--the controllers and the CFOs are juggling multiple demands; they're trying to keep up with all of those changes." Topic 606 was issued in 2014, and was effective in 2018 for public companies and 2019 for private companies. The standard eliminates hundreds of pieces of industry-specific revenue guidance and replaces them with a principles-based, five-step model for reporting revenues earned from certain types of contracts. The rules took more than a decade to develop.
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|Title Annotation:||FASB News|
|Publication:||The CPA Journal|
|Date:||Aug 1, 2019|
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