Welcome to the September 2011 edition of Setting the standard, our publication designed to keep you informed about the most recent developments on the joint standard-setting activities of the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB).
Take two—times three? It looks likely. Each of the “big three” joint projects are poised for a second showing. Revenue recognition will be re-exposed shortly. Leases will follow once the boards finalize their discussions. And, the financial instruments project seems destined for the same path. Not surprisingly, constituents have applauded the re-exposure decisions, which they view as a necessary step to ensure the final products are high quality.
So, what’s new? During their September 2011 joint board meetings, the FASB and IASB debated key open issues in the priority projects. Impairment is the current focus of the financial instruments project as the boards continue to seek a common solution. For leases, lessor accounting is once again at the forefront with the boards recently agreeing on a new approach. As for revenue recognition, the boards are wrapping up their discussions and have been putting the finishing touches on the upcoming exposure draft.
Given the decisions on re-exposure, what does the timing of completion of these projects look like? At best, look for final guidance sometime in 2012. Effective dates are likely to be extended, meaning it will be a few years before the new standards affect the financial statements. Although that may seem like a long time from now, it may be necessary to start thinking about adoption sooner rather than later. This is because the boards have proposed retrospective application for some of the standards, most notably revenue recognition. Assuming the new standards become effective in 2015, companies would need to start capturing data under the new guidance as early as 2013.
For more on the "big three" and other joint projects, read the September 2011 edition of Setting the standard.