The Financial Accounting Standards Board (FASB) has announced that it has proposed an update to make cloud computing fees easier to process. According to the source, customers will have more input if this Accounting Standards Update, titled "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" takes effect. Firms need IT consulting services to stay informed as to how this Update would affect their business transactions if passed.
Until November 18 2014, the FASB is welcoming comments on the proposal through its website. The update is designed to take effect at different rates for the companies that use it, depending on whether they are public or private. Regardless, all companies would be able to sign up early, and could decide for themselves how to apply the simplification guidelines.
The release states that the change was prompted by complaints over the lack of support in regards to payment for cloud services. It is hoped that this effort would make it easier for companies to make efficient transactions with cloud-related businesses.
"Stakeholders have raised concerns that the lack of guidance in this area leads to unnecessary cost and complexity when evaluating the accounting for those fees, as well as some diversity in practice," the statement reads. "To address this issue, the proposed guidance would help customers determine whether a cloud computing arrangement includes a software license."
At the same time, the release states that the customers could stick to their current practices in regards to existing protocol.
Follow IT best practices when it comes to cloud initiatives in order to make all steps of conversion easy to handle.