Tips for successful revenue recognition implementation
Financial statement preparers may be feeling a bit less pressure in the wake of a recent decision by FASB and the International Accounting Standards Board (IASB) to delay the effective date of the new revenue recognition standard by one year.
The delay gives preparers some relief as the boards work on clarifying changes to the standard, which was issued in May 2014.
But there’s still plenty of work to do, SEC Chief Accountant James Schnurr said last week. “The effective date of the standard will be upon us before you know it,” Schnurr said Friday during a speech at the University of California–Irvine Audit Committee Summit in Newport Beach, Calif.
Schnurr said he is encouraged that preparers, auditors, and standard setters are working together to identify, evaluate, and resolve implementation issues.
He said he’s confident that the standard will lead to comparability across industries and jurisdictions, which was one of the objectives FASB and the IASB set out to achieve. “Revenue is one of the single most important measures used by investors, and I believe the new standard—when applied with professional judgment—will consistently report revenue, regardless of the company’s industry or the capital markets accessed,” Schnurr said.
A thorough implementation plan for the standard will include key actions to be taken during the implementation phase, the estimated timing of these actions, and how management is tracking against that timing, he said.
This would include a holistic consideration of how the new guidance will affect aspects of the organization beyond the financial statements, such as information systems, business processes, compensation and other contractual arrangements, and tax planning strategies. Read more on the Journal of Accountancy.