Last week during a meeting of the Financial Accounting Standards Board’s (“FASB”) Financial Accounting Standards Advisory Council, FASB member Lawrence Smith expressed uncertainty about Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers. Smith said that implementation of the revenue recognition standard will be of significant costs to companies, and the FASB would’ve been better off making targeted improvements to its revenue guidance instead of a complete rewrite. He also noted that smaller accounting firms and companies do not have experts to help with the standard or Codification. As a result, those firms and companies are making mistakes because they are unsure of how to interpret the new guidance.
The complexity of interpreting the guidance may spark an extensive rewrite of the revenue standard. Before determining whether or not to undertake a wholesale project review, however, Smith believes the FASB should focus on how much it would cost to change the guidance. He also wants the FASB to wait until it has considered feedback from the Invitation to Comment, Agenda Consultation.