Nonprofit Blog

You’ve probably heard the song, “Love is a many-splendored thing.” Well, your company’s accounting software should be, too. That is, you’ve got to make sure your system does all of the big and little things necessary to efficiently and accurately track your financials.

In June of 2014, FASB and the IASB issued new joint guidance that addresses one of the most important measures investors use when assessing a company’s performance and prospects — revenue. FASB’s version, communicated in ASU No. 2014-09, Revenue from Contracts with Customers, standardizes and simplifies the revenue recognition process for customer contracts across different industries and geographic locations. It also requires more comprehensive footnote disclosures for all types of public and private companies. This article provides an overview of the converged guidance, along with a brief look at the potential impact on certain industries. Note: This article, originally published September 2014 has been updated to reflect a FASB notification issued March 2015. The new revenue recognition standard takes effect for non-public entities for annual reporting periods beginning after December 15, 2018 (originally December 2017). According to Michael Cohn, Editor-in-Chief of Accounting Today (April 2, 2015), "In terms of an early adoption provision, FASB decided to permit both public and nonpublic entities to adopt the new revenue standard early, but not before the original public entity effective date (that is, annual periods beginning after Dec. 15, 2016). A public entity would apply the new revenue standard to all interim reporting periods within the year of adoption. A nonpublic entity would not be required to apply the new revenue standard in interim periods within the year of adoption."