Accounting

Japan's Standards Board Supports One-Year Deferral of Revenue Rules

By Denise LugoThe Accounting Standards Board of Japan said it supports deferring the effective date of new revenue accounting rules by one year for public business entities because of compelling reasons raised by its constituents.“We learned that some were of the view that it would take some more time to install the information systems that would accommodate the changes in accounting practices necessary to implement the guidance,” the ASBJ said in a May 29 letter to the U.S. Financial Accounting Standards Board.The ASBJ, however, cautioned that as a general principle, deferring the effective date of a standard should be discouraged once a standard has been issued. Such deferrals risk undermining the reliability of a standard and the authority of the standard-setter.Urges Maintenance of Comparability FASB and the International Accounting Standards Board issued the mostly converged global rules, Revenue from Contracts with Customers, May 2014. The guidance takes effective Jan. 1, 2017 for public companies.In April FASB issued a proposal to defer the effective date by one year for public companies using U.S. generally accepted accounting principles (GAAP), following an appeal by a number of its constituents that they needed more time to apply the rules.Similarly, in May the IASB proposed deferring the rules under international financial reporting standards (IFRS 15) one year, so that they would instead take effect Jan. 1, 2018.The ASBJ suggests that the boards move to adopt the same deferral date, so that comparability of entities' reported revenue amounts can be maintained.If the boards landed on different deferral dates, this would place significant burdens on Japanese companies that have multinational global operations with subsidiaries in the U.S. and other regions, ASBJ said.“This is mainly because they would have to maintain dual information systems to support the parallel implementation of the two standards,” the letter states.To contact the editor responsible for this story: Steven Marcy at smarcy@bna.comThis article first appeared in the Accounting Policy & Practice Report, the highly-respected news component of Bloomberg BNA. For more information about this comprehensive research service, visit www.bna.com or call 800.372.1033.

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