Painful Side Effects of New Accounting Standards
New accounting standards could have side effects once they are implemented. While there seems to be a plethora of benefits from the new standards, many firms are finding implementation issues.
In an article from Bloomberg BNA, author Gery Brownholtz writes, “The Financial Accounting Standards Board (FASB) issued ASU 2014-09 Revenue from Contracts with Customers declaring that the new standard would remove inconsistencies in revenue requirements, improve comparability of revenue, provide more useful information through improved disclosure requirements, and simplify the preparation of financial statements. You get the picture—all these wonderful benefits. It is only during implementation do the side effects become fully apparent”.
In the article Brownholtz discusses:
- What FASB is doing to help with implementation
- History of implementation problems with new accounting standards
Brownholtz continues, “It may be best for entities to expect the unexpected and start early to identify all areas where the entity may be affected by the standard, particularly taking advantage of all the guidance provided by the standard setter. Remember that with a new accounting standard there is no fine print or soft voice to provide warnings”.
To read more, see the full article from Gery Brownholtz in Bloomberg BNA.