As posted here, FASRI is issuing a call for research consultants to conduct revenue recognition studies.  This call is a little different from the usual ‘call for proposals’ because applicants must be willing to work closely with FASRI and FASB staff to identify research topics that will be most helpful in staff and Board deliberations.   Jeff Wilks will be overseeing this endeavor.

The recent Financial Reporting Issues Conference clarified a number of normative questions that still need to be answered:

  • What is the appropriate scope of the revenue recognition standard?  If certain commercial transactions or industries (like insurance or leasing) should be excluded from the scope of revenue recognition, on what basis?
  • What are the best ways to distinguish ‘performance obligations’ from other liabilities?  The performance obligation is an obligation to the customer that, when satisfied, results in the recognition of revenue.   Must one identify obligations to customers without reference to management intent or the firm’s business model — and if so, how can that be done?
  • How does one distinguish between the sale of a product and the delivery of a service?  This question is closely related to the boundary between the revenue recognition project and the leasing project.
  • What is the best operational definition of ‘control’ — a critical issue, since a transfer of control satisfies the performance obligation and results in revenue?

These are just a few of the questions that occur to me, and I am sure other attendees are puzzling over many more.  We are looking for academics (individuals and teams) who are interested in identifying researchable positive questions that will help provide a basis for answering these normative questions.   (See here for my view on positive and normative research.)

Join us at 11am ET on Wednesday, December 09, as we discuss some takeaways from the conference and start a conversation about research directions for revenue recognition.

p.s.  A similar call for research on leasing will be issued soon.