On April 8, 2020, the Financial Accounting Standards Board (“FASB”) voted to issue a proposal to defer for one year the effective date of the new Revenue Recognition Standards commonly referred to as “606.” This deferral will only apply to private company franchisors. All other industries and public companies will need to still comply with 606. We thought it was worth noting that even though this proposal has been issued, there will be a 15-day comment period. After the comment period has ended, the FASB will need to reconvene and issue an official Accounting Standards Update to make the deferral effective. What does this mean to you? If you already issued your December 31, 2019 audit there is nothing for you to do at this point until further guidance is released. If you are in process of finalizing your December 31, 2019 audits, you should speak with both your franchise attorney and auditor. This conversation will help determine if you should hold your Franchise Disclosure Document “FDD”, and audit until the rule is effective and revert back to the old rules prior to 606, or submit your FDD and audit prior to April 30, 2020 with full implementation of 606.
Citrin Cooperman’s Franchise Accounting & Consulting Practice professionals are committed to keeping you informed, and will provide updated information on this topic. If you have any questions regarding this deferral, or how it may affect you, please contact Aaron Chaitovsky or Michael Iannuzzi.