Government Contractors Alert: Proposed Revenue Recognition Guidance for Government Contractors
On December 19, 2008, the U.S. Financial Accounting Standards Board and the International Accounting Standards Board (collectively termed “the boards”) jointly issued a discussion paper, "Preliminary Views on Revenue Recognition in Contracts with Customers." The intent of the boards is to converge revenue recognition guidance under U.S. generally accepted accounting principles ("U.S. GAAP") and International Financial Reporting Standards ("IFRS"), while providing clearer guidance and consistency among similar transactions and between industries.
The proposed guidance outlines a single revenue recognition model that applies to all contracts with customers, regardless of industry. For long-term contracts in the aerospace and defense industry, the proposed guidance differs significantly from current U.S. GAAP and IFRS and could result in fundamental accounting changes, including an increased number of accounting units, deferral of revenues, and fluctuating margin rates.
Comments regarding the proposed guidance are due to the boards by June 19, 2009.
To learn more about the proposed guidance and the potential implications for your company, download the attached overview by Tim Bremer, partner, Deloitte & Touche LLP.