This is a guest blog post by RGP Director of Client Service, Stuart Fisher.
It’s official. The adoption of ASC 606 – the new Revenue Recognition accounting standard, is not going to be fun. Forty percent of finance professionals surveyed by Intaact would rather stand in line at the DMV than go through the process of preparing and implementing the new standard. The technical aspects, which are enough to make anyone cringe, raise many questions. Among them:
- How many performance obligations do you have?
- What are the impacts of contract modifications?
- Will you recognize revenue over time or at a specific point in time? Which recognition method is appropriate for your organization?
- What is your stand-alone selling price?
- Are you the principal or the agent?
Beyond these technical uncertainties, plenty of implementation challenges may affect a number of functions within your organization. For example … How many contracts need to be reviewed? Are current systems sufficient to accommodate the new requirements? How will reporting disclosures be affected? Is the data needed to comply available, and if so, is it available to the appropriate users? How will internal controls be revised or implemented to accommodate the need for new data and calculations? Who in your organization has the time and skillset to meet the aforementioned needs?
While there are a number of activities we would rather do, implementing the new revenue recognition standard is something many of us will need to do. In fact, the SEC has publicly stated that they are expecting more robust disclosures in upcoming filings. Through impact assessments, companies have learned how the standard will affect their organizations and will be sharing this information in their filings to update investors. To facilitate transparency and the timely absorption of the information by market participants, the SEC suggest incorporating an impact discussion into investor outreach activities.
If you have any questions about how your company should handle the new standard or how RGP can help you, please contact me at 973-401-2565 or email@example.com.
Stuart Fisher is the director of client service at RGP, a global consulting firm that provides advice and execution to clients of all shapes and sizes in more than 70 countries—including 87 of the Fortune 100. With a Big Four heritage, its 3,000+ accomplished professionals offer deep expertise across a broad range of integrated services. RGP provides its clients the agility to expand capacity and increase capability. And the support they rely on to help them achieve all that’s possible.