The New FASB & IASB Revenue Recognition Standards; Implementation and Effects
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Authors
Harmon, Frederick
Ntseh, Desmond
Issue Date
2016-04-01
Type
Presentation
Language
en_US
Keywords
Accounting standards , Financial Accounting Standards Board (FASB) , International Accounting Standards Board (IASB)
Alternative Title
Abstract
In recent years there has been a growing recognition in the accounting profession that given the speed and scope of economic globalization, the need for comparability and transparency has never been more important. Accountants and financial professionals increasingly have recognized the necessity for accounting standards that are uniform across all industries and business entities. Investors, regulators, lenders, and ultimately the public must be able to compare very complex financial statements. With simplified rules, it becomes easier for all financial statement users to analyze the substance of these organizations and make informed decisions based on uniform standards. Financial professionals need these uniform standards to be able to easily and more efficiently analyze business entity finances to make investment and growth decisions. The government, for tax and other purposes, needs to see all financial statements in a uniform format to promote transparency and comparability. Thus, we have seen the Securities & Exchange Commission become an important proponent of these accounting changes. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have undertaken several projects to unify the accounting methods for various topics world- wide. In essence, the controversy of rules based versus principles based accounting frameworks is moving towards the latter and away from the former, yielding consistency and uniformity in accounting applications. Revenue recognition here will mean, when, why, and how business and other entities will recognize revenue from contracts and other transactions that may lead to revenue for these entities. This research article will study the pronouncement of the new revenue recognition standard, ASU2009-14 Topic 606, created by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) IFRS-15, as a step in the direction to unify accounting standards worldwide. We will analyze the reasons for the new revenue recognition standards; the new standards will be explained in detail, which will include accounting for contracts, disclosure requirements and other transactions that will be affected by the new standards. In addition, the current and future effects of these new standards will be studied in depth, the future of unification of financial standards will be discussed. Finally professional opinions will be given as to how different entities can adopt these new standards and adhered to the new laws stated in the pronouncement.