Engineering & Construction industry podcast series: Parts one & two
FASB/IASB revenue recognition project: Impactful insights for the engineering and construction industry
The model for revenue recognition is changing and this may have a significant impact on the Engineering and Construction industry. In December 2008, the IASB and the US FASB issued a discussion paper proposing a new, single revenue recognition model that could significantly affect current revenue recognition policies for all companies. This proposed model would replace all existing IFRS and US GAAP revenue recognition guidance, including guidance specific to the construction industry.
The boards have made substantial progress in their continued deliberations since the discussion paper was issued and, with only a few aspects of the model remaining to be discussed, the boards expect to issue an exposure draft in mid-2010 and a final standard in 2011. The effective date for the standard has yet to be decided, but the boards discussed a possible effective date no earlier than 2014 to provide management adequate time to prepare for and implement the standard.
The new rules will reach far beyond financial reporting. Accordingly, companies should assess the impact such proposals would have on entity-wide functions, such as accounting, IT systems, key metrics, bonding capacity, prequalification forms, and legal contracts (e.g., debt covenants and contracts with customers).
In addressing these new standards, PwC LLP's Engineering & Construction practice has developed a podcast series to outline the proposed changes in standards and help companies in the engineering and construction industry understand how these proposals may impact them. The following topics are discussed:
- An overview of the FASB/IASB joint projects on revenue recognition
- Potential industry impacts
- Comment letter summary
- PwC's view
- Actions companies should be taking now