Companies that veer too far away from new revenue recognition guidance will have to explain their reasoning to regulators, the Wall Street Journal reported today. “If a company chose to take a different approach, we would expect them to come in and talk to us about why they were not going to follow the … non-authoritative guidance,” said James Schnurr, chief economist for the Securities and Exchange Commission. New rules for recording revenue don’t go into effect until 2018. However, companies must show back years of financials under the new rules so investors and analysts can make appropriate comparisons. That means public company finance teams are already adopting the standard. To help companies adopt the changes, the Financial Accounting Standards Board and the International Accounting Standards Board, which jointly developed the rules, are issuing implementation guidance through a transition resource group.
