Accounting

Q&A: Getting Ready for Revenue Recognition Implementation

Counting down to the 2018 adoption date for public companies, more organizations are accelerating or launching implementation efforts to comply with the substantially converged revenue recognition standards approved in 2014 by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).   FERF spoke with JIM HANNAN, risk consulting managing director, and SCOTT SACHS, senior manager, at Crowe about where companies are in their adoption planning and key considerations as they continue or jump-start their revenue recognition implementation efforts.  Q: IN GENERAL TERMS, WHERE SHOULD COMPANIES BE IN PREPARING TO ADOPT THE NEW REVENUE RECOGNITION STANDARD?  JIM HANNAN: What we’ve found working with a number of companies is that most are in the beginning of evaluating the impact of the standard, and many public companies might be a little behind where they should be. We think that by now companies should have completed the process of evaluating the new standard, assessing the impact it will have on their financial statements, and developing a plan for implementation.  SCOTT SACHS: We are finding that the significant changes in the new standard are taking some companies by surprise. As companies start to evaluate the impact of the new standard, they’re realizing the pervasive effects it may have on their organization outside of the financial statements in areas such as their IT systems, legal department, sales department, and internal controls.  Q: AS YOU’RE TALKING WITH CLIENTS, WHAT TYPES OF ADVICE ARE YOU OFFERING?JIM HANNAN: We’re talking to a lot of companies to educate them about the new standard and the steps they should go through in the implementation process. Because a lot of companies are not sure where to begin, having a framework to help them go through that process is helpful for setting the stage for what they have to do next.   There are a lot of resources to help companies understand the standards. Crowe has developed an implementation framework, which begins with understanding the standard. The Crowe Revenue Recognition Resource Center includes publications that address industry-specific nuances in the new standard. The AICPA has formed 16 industry task forces to understand the effects in different industries and work through those. There’s also a Transition Resource Group set up by the FASB and the IASB specifically to deal with...

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