Legal perspective on IASB-FASB revenue recognition draft: It’s complicated!

by Kurt Schulzke

Got revenue? Better learn to account for it. It’s not going to get any easier, thanks to a new standard coming soon, from your local FASB and IASB.

For SEC whistleblowers and attorneys engaged in many business-related practice areas, revenue accounting can be a big issue. It is the most common source of financial reporting fraud and financial statement restatement. It also figures prominently in a wide variety of corporate and employment-related legal documents and disputes. Interestingly, the U.S. accounting standards setter (the FASB) has never issued a generally-applicable standard on how to account for revenue, leaving U.S. practitioners somewhat in limbo. This gap in U.S. GAAP is slated for change, in early 2013, when the IASB and FASB are expected to issue a new, globally-harmonized revenue standard.

For a relatively easy read on present and future revenue accounting (a colleague dryly observes the evident oxymoron), co-authors Gerlinde Berger-Walliser, Pier Luigi Marchini, and I recommend our article, “Lexis Nexus Complexus: Comparative Contract Law and International Accounting Collide in the IASB-FASB Revenue Recognition Exposure Draft,” forthcoming in the Vanderbilt Journal of Transnational Law, March 2013.  Among other things, we provide a “revenue primer” (for non-accountants), compare current revenue accounting rules (U.S. – including SEC and FASB — and international) with the near-final, global FASB-IASB rule, and offer practice and policy suggestions, all in a fascinating international, comparative-law context.

A pre-publication draft is freely available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2139578. Click “Dowload this Paper”.

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