Public companies are still behind in their efforts to implement ASC 606 & IFRS 15. Time is running out for public companies, as they only have a year before the new revenue recognition guidelines come into play. The new accounting standard is effective for public companies with annual reporting periods beginning after December 15, 2017 (fiscal year 2018) and non-public companies beginning after December 15, 2018 (fiscal year 2019).
According to Compliance Weeks recent Revenue Recognition survey, the majority of companies are still assessing the impact of the revenue recognition rules. The new guidelines are not something to be taken lightly, as it will require a significant amount of work for companies to prepare, and it seems as though many public companies are not even close to being ready.
Audit committees play an important role in helping companies prepare. It’s the auditors role to get up to date on how management teams are preparing for new revenue recognition standard. To help audit committees prepare, The Center for Audit Quality recently published a guide Preparing for the New Revenue Recognition Standard: A Tool for Audit Committees. The 8 page alert includes discussion points for auditors which help explain the standard, impact assessment, implementation plan, transition method, and disclosures. This document should be used by auditors to help format the discussions with audit committees. The ultimate goal is to help them determine how the new revenue recognition standard impacts their organization and next best steps.
If public companies wait until the effective date to address the new revenue recognition guidelines it will be too late. Tacking the new revenue recognition standard is not an easy task. Public companies that delay ASC 606 preparation could be at a disadvantage when it comes to implementing ASC 606 changes to their financial systems and processes.
For helpful resources and guides on the new revenue recognition standard, click here.
Topics: Revenue Recognition