Preparing for Revenue Recognition
The FASB’s new revenue recognition standard, which incorporates principles-based concepts, represents one of the more sweeping changes to financial reporting in years. Under this new standard, companies will recognize revenue from customer contracts using a five-step model that will require significant management judgment. It will also require the accumulation of data that may not have been necessary under the previous standard. Companies will have to determine whether their systems are configured to collect and analyze the information needed to produce adequate disclosures. This new standard will impact companies in all industries.
While private companies do not need to adopt this standard until 2019, most public companies spent significant time in 2017 preparing for their 2018 adoption. The good news is that there were many lessons learned that private companies can benefit from. As their implementation stories will demonstrate, complying with this new standard can be a time-consuming and costly process that extends beyond the accounting and finance department. Companies that have a late start implementing the changes may be in for some unwelcome surprises.
In this session, Preparing for Revenue Recognition, there was a panel discussion that provided perspectives on the standard and its implementation challenges from the FASB, a public company financial reporting professional and a financial systems executive. Attendees left the session with a greater understanding of the standard and its implementation challenges, as well as newfound urgency to prepare their companies to be compliant by 2019.