Now comes the (really) hard part.

• Author: Westfall, Christopher
• Position: REVENUE RECOGNITION

The accounting industry hit a major milestone when the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) released the latest revised draft of proposals on revenue recognition, but much of the heavy lifting remains, according to participants at Financial Executive International's (FEI) June conference titled Revenue Recognition: Guidance, Changes and Implementation.

"This is where the rubber hits the road. What does this mean for each of your companies?" asked Mitch Danaher, deputy controller at General Electric Co. and FEI director, during the meeting in New York. "What will change and how? And, importantly, what is not intended to change."

The road to revised and internationally converged revenue recognition standards has been a long time in coming, with accounting bodies in the U.S. and London first beginning work on the difficult task over a decade ago.

Events began to speed up in November of 2011 when the FASB and IASB published the first exposure draft (ED), which was followed in January 2012 with a new draft that included proposed amendments. The current version of the revised ED was open for public comment and many expect the work on a final rule to be completed by September.

The goal of the new rule is to allow investors to compare revenues between companies and industries without the myriad of caveats and inconsistencies that have often plagued corporate balance sheets. Once adopted, the principles-based approach will end the industry-focused guidance currently used under current U.S. generally accepted accounting principles (GAAP).

But despite all the progress made up until this point, there is still a great deal of work that needs to be completed.

Implementation questions remain across several industries that measure and account for revenues in a unique manner--such as entertainment and pharmaceuticals--and many financial executives in those sectors have just begun to review some of the most difficult implementation challenges, said Eric Knachel, a partner at Deloitte.

For example, Knachel pointed out, significant questions remain...