SEC’s Bricker Urges Implementation of Revenue Recognition Standard
Nearly 10 percent of public companies have not started to implement Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). While the percentage is insignificant, Securities and Exchange Commission (“SEC”) Chief Accountant Wesley Bricker is telling unprepared companies they have no option but to begin the implementation process.
At a panel discussion during the SEC Speaks conference on February 25, Bricker said that companies cannot overlook the importance of the Financial Accounting Standards Board’s revenue recognition standard and must prepare accordingly. He encouraged companies to communicate their implementation plans with audit committees, executive teams and others, and noted the transition disclosures required by Staff Accounting Bulletin No. 74, Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period, (SAB Topic 11.M).
Bricker also wants companies to prioritize their internal controls over financial reporting to ensure they meet revenue reporting compliance with Section 404 of the Sarbanes Oxley Act of 2002 while transitioning to the revenue standard.