Journal of Accountancy has started a five-part interview with FASB Chairman Leslie Seidman discussing the revenue recognition exposure draft. First part can be found here.
Two highlights from part one:
The FASB is trying to balance the strong desire from the US community for more detail explanation on how to apply the guidance while the international community thinks there is too much detail already.
Part of the tension between the US and international environment can be illustrated in one great comment from Ms. Seidman:
We have some unique environmental issues in the United States in the sense that we have a very robust audit function, review function and enforcement function. So to prepare financial statements in the United States, people would like to have some level of comfort that they have enough guidance to feel confident they have prepared a financial statement in accordance with the intent and spirit of the standards.
My view from this little firm in a corner of the nonprofit community is that in just one comment we also see one of the major issues on IFRS as well.
Companies (and a tiny number of NPOs) that prepare their own financials would like to have some comfort level their numbers are on track before their auditors arrive. Differences at that point generate letters to the audit committee and disagreements that show up in SAS 115 letters. Oh yeah, don’t forget an arguement at that point could create a material weakness in the Sarbox internal control letter.
Auditors would like to be comfortable that their opinions accurately report on the financials before the SEC/PCAOB/peer reviewers/juries pounce on them with second guessing on what the financials statements should have reported based on someone else’s opinion on what those few words in the new rules really mean.
That comment on revenue recognition also applies to the entire body of IFRS.
Another highlight – FASB is still on track for issuing a final standard in the second quarter of 2011.
Stay tuned for the following 4 parts.