On March 22, 2016 at the 12th Annual Life Sciences Accounting and Reporting Congress in Philadelphia, Pennsylvania, James V. Schnurr, Chief Accountant of the Securities and Exchange Commission gave an update on the new revenue recognition guidelines and the process of implementing them. The following is a summary of his speech.
Revenue Recognition Policies
Mr. Schnurr began his speech by talking about the importance of revenue as a financial measure used by investors globally in assessing a company’s performance and prospects. He also addressed the inconsistencies between IASB and FASB and the importance of a standards convergence. The movement toward a converged standard culminated in May 2014 when the FASB and IASB issued the new standard on recognizing revenue (ASC 606 and IFRS 15 respectively). The new standard is designed to improve consistency by eliminating industry-specific guidance, providing a more robust framework for addressing revenue issues, and requiring additional disclosures to users of financial statements. Mr. Schnurr went on to say:
I consider the new converged revenue standard to be an important step forward in financial reporting for preparers and investors, both domestic and foreign. These changes will impact all companies and all industries, but the extent of the impact will differ from industry to industry.
