How companies formally recognise incoming funds as revenue is the last remaining area to be discussed and agreed upon, the two accounting standards boards said in a joint statement.
The new transition group "will be responsible for informing the IASB and the FASB about interpretive issues that could arise when companies, institutions, and other organisations implement the revenue recognition standard," the IASB and FASB said in the statement.
"It will solicit, analyse, and discuss stakeholder issues that apply to common transactions that could reasonably create diversity in practice.
" In addition to providing a forum to discuss the application of the requirements, the transition group will provide information that will help the Boards determine what, if any, action will be needed to resolve that diversity. [However, it] will not issue guidance."
The new resource group will convene following the final issuance of the IASB’s revenue recognition standard later this year, the standard boards’ statement said. It added that the group is expected to complete its work before the standard takes effect in 2017.
Accounting industry convergence
The London-based IASB is best known – mainly to accountants and chief financial officers – for its role in creating the International Financial Reporting Standards (IFRS), which has been in use for the past decade by much of the world, apart from the US, to keep corporate financial reports. All EU companies have had to use the IFRS since 2005, and other countries have been signing up to it in the years since then.
The Norwalk, Connecticut-based FASB sets the American standard for preparing financial reports, and is deeply involved in the convergence discussions with the IASB.
Some 55 jurisdictions have now adopted the IFRS for at least some companies in their capital markets, according to the IASB, and all but two of these, it says, are now starting to use them. Brunei and Colombia are due to begin doing so, in 2014 and 2015 respectively.
Of the remaining 11 jurisdictions that have not adopted the standard, two – Pakistan and Singapore – have adopted most but not all of the standards, with some modifications, while three others, including the US, permit companies to use the IFRS "on a limited voluntary basis for domestic and/or foreign issuers".
Before the IFRS was created, different countries had different interpretations of accounting terms, making comparisons of the performances of companies operating in different countries difficult.
