The Financial Accounting Standards Board released a staff educational paper Tuesday to answer questions about how to apply its revenue recognition standard to presentation and disclosures to construction contracts that contain retainage (or retention) provisions. 

The paper pointed out that construction businesses are often subject to contracts that contain retainage (or retention) provisions. 

Companies that operate in the construction industry are frequently subject to contracts that include retainage provisions. Those provisions generally offer a kind of security to the customer by permitting the customer to withhold a portion of the consideration billed by the company until certain project milestones are met or the project is finished.

The revenue recognition standard, also known as Topic 606 or ASC 606 in FASB’s Accounting Standards Codification, offers guidance on the presentation of a contract with a customer on the balance sheet as a contract asset or a contract liability and related disclosures, but lacks specific guidance on retainage. 

The educational paper explains the presentation and disclosure requirements in GAAP about retainage for construction contractors and provides some examples of voluntary disclosures of retainage that would provide more detailed information about contract asset and contract liability balances.

The FASB staff received feedback from private company stakeholders in the construction industry, as well as the FASB-affiliated Private Company Council,  questioning the proper application of Topic 606 guidance to retainage. Some users of private company financial statements, including sureties, provided feedback that information about retainage is important to their analysis. 

The educational paper aims to clarify the presentation and disclosure requirements in GAAP about retainage for construction contractors and provide example voluntary disclosures of retainage that would currently be permissible under GAAP and would provide users with more detailed information about contract asset and contract liability balances. 

The educational paper doesn’t change or modify current GAAP and isn’t intended to be a comprehensive assessment of the accounting for retainage in accordance with Topic 606. The exhibits included in the paper are for illustrative purposes and don’t create additional requirements beyond those in current GAAP. Entities should refer to current GAAP and consider entity-specific facts and circumstances when preparing financial statements.

Hourly earnings and job growth for workers in small businesses remained mostly unchanged last month, according to payroll provider Paychex.

The Paychex Small Business Employment Watch, which includes the Paychex Small Business Jobs Index, showed job growth continued at levels seen over the last several quarters at 99.75 in March for U.S. businesses with fewer than 50 employees. Paychex wage data found the hourly earnings growth rate (2.91%) for workers in U.S. small businesses remained essentially similar in March compared to February.

The national Small Business Jobs Index dipped 0.29 percentage points to 99.75 in March, slightly less than the pace set at the end of the past two quarters. At 2.91%, hourly earnings growth stayed below 3% for the fifth month in a row in March, while one-month annualized hourly earnings growth (3.51%) outpaced annual growth (2.91%) for the fourth consecutive month.

“We don’t see any signs of recession,” said Frank Fiorille, vice president of risk, compliance and data analytics at Paychex. “It looks like they’re still doing OK, not gangbusters, but still keeping up with the range that they have done the past few months.”

The Midwest remained the top region for the 10th consecutive month on small business job growth, despite slowing 0.58 percentage points in March. Texas continued to lead the other states on small business job growth in March, while Minneapolis gained 1.87 percentage points to move into first place in March among metropolitan areas. The manufacturing industry gained 1.05 percentage points during the first quarter of 2025 to perform best among the industry sectors on job growth.

On the wage front, Tampa topped the other metro areas in March in terms of both hourly earnings growth (4.20%) and weekly earnings growth (4.00%).

Fiorille doesn’t see much impact on small businesses yet from the tariffs that President Trump administration has threatened to impose on Wednesday. “My handicapping of this is that it will obviously impact them, but not as much as you’d think,” he said. “I do think a lot of them are service related, but even in the service-related ones, they’ll have some issues if they import stuff as well. Then there might be some indirect inflation costs on them.”

He advises accountants to keep an eye on further developments on tariffs, tax changes and the steady stream of executive orders from the White House.