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By Steven Marcy
Feb. 22 — The Securities and Exchange Commission will consider the conclusions of the revenue recognition Transition Resource Group (TRG) to be practical guidance for implementing the new standard, the SEC's chief accountant told a securities law group.
The SEC will expect companies to adhere to the findings of the TRG—despite them not being authoritative pronouncements or standards issued by the Financial Accounting Standards Board or the International Accounting Standards Board, SEC Chief Accountant James Schnurr told the Practising Law Institute's “SEC Speaks” conference Feb. 20. The boards jointly formed the TRG in 2014 shortly after they issued the revenue standard .
“From a practice point from my office, we would expect a registrant to follow the guidance that comes out of those deliberations” of the TRG, Schnurr said.
“If a company chose to take a different approach” from what the TRG concluded, “we would expect them to come in and talk to us about why they were not following” what the TRG had found, Schnurr said.
Because the revenue recognition standard by FASB and IASB is “largely” converged, foreign companies filing under international financial reporting standards in the U.S. also should consult the minutes of the TRG group meeting and follow them in their filings or justify why they haven't, Schnurr said.
Schnurr noted that IASB has said it won't any longer send representatives to future TRG deliberations, three of which are tentatively scheduled for later this year. But Schnurr noted that IASB will monitor future TRG deliberations and has indicated that if something significant emerges from them, it will consider them.
After issuing the standard in 2014 , FASB and IASB both issued further authoritative implementing guidance. FASB said in January that it probably needs to issue further guidance on intellectual property licensing .
Schnurr said Feb. 20 he fears that many companies have fallen behind on installing the processes, internal control procedures and information technology devices needed to meet the implementation deadline, which is after Dec. 15, 2017, for public companies. Other SEC officials have indicated some companies mightn't be ready in time.
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For a general discussion of the new revenue standard, see 5098, The New Revenue Recognition Standard - Analysis & Application I, and 5099, The New Revenue Recognition Standard - Analysis & Application II, at 5098.
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