After the FASB issues a major new accounting standard, it performs a postimplementation review (PIR) process to evaluate whether the standard is achieving its objective by providing users of financial statements with relevant information that justifies the costs of providing it. This process enables the Board to solicit and consider stakeholder input and FASB staff research. At its July 28, 2021, and September 21, 2022, meetings, the FASB discussed feedback received to date on the revenue standard as well as the results of research performed on certain revenue topics, including disclosures, short-cycle manufacturing, principal-versus-agent considerations, licensing, and variable consideration. In the handouts prepared for the Board’s July 2021 and September 2022 meetings, the FASB staff noted that stakeholder feedback on the revenue standard was positive overall, particularly from users of financial statements since the standard results in more useful and transparent information, improved disclosures, and comparability across entities and industries. The staff further observed that while many preparers noted significant one-time costs associated with implementation of the standard, they also highlighted that the standard has been beneficial in the long run.
On November 10, 2023, the FASB hosted a public roundtable on the PIR of ASC 606. During this meeting, participants discussed the benefits and costs of the revenue standard, implementation challenges, improvements to the standard-setting process, and assessment of the PIR process.
The PIR of ASC 606 was further discussed at the FASB’s May 8, 2024, meeting, whose agenda was facilitated by a handout prepared by the FASB staff in advance. At the meeting, the FASB staff updated Board members and other participants on feedback received from stakeholders about benefits, costs, and implementation challenges associated with the adoption of the revenue standard. In addition to giving an overview of topics discussed at prior meetings, the staff observed that stakeholders appreciated the revenue standard’s (1) elimination of industry-specific guidance, (2) provision of comprehensive principles-based guidance, and (3) convergence with IFRS® Accounting Standards. However, the staff acknowledged stakeholders’ observation that in addition to the one-time implementation costs, application of the revenue standard has resulted in higher ongoing costs, primarily because ASC 606 requires entities to exercise greater judgment than they did when applying legacy revenue guidance. Also at the meeting, Board members discussed the revenue standard’s impacts on comparability, including challenges faced by specific industries upon the elimination of industry specific guidance. The staff observed that stakeholders generally agreed that the benefits of eliminating this guidance have outweighed the costs of doing so.
At the FASB’s October 2, 2024, meeting, the Board resumed its discussion of the PIR but made no additional tentative decisions related to it. As indicated in the FASB staff’s handout for the meeting, the staff is drafting a PIR report that will be posted on the FASB’s Web site pending input from the Board members and final approval from the board of trustees of the Financial Accounting Foundation, the FASB’s parent organization.