It’s been almost six months since the FASB & IASB announced the long-awaited changes to the accounting standards for revenue from contracts with customers. While the affects of the revenue recognition standard will impact certain industries more than others, almost all entities will be affected to some extent by the significant increase in required disclosures and the level of detailed data collection required.
At the core of the new standard is the five-step revenue recognition model, which eliminates much of the industry specific guidance in favor of more emphasis on management judgment on the part of individual organizations. While the compliance date of January 2017 seems far away, companies need to start thinking about how to make the required changes to everything from current accounting policies, to systems, processes and controls.
In a published article in July, the Journal of Accountancy stated “At first glance, it seems as though the implementation date provides companies with plenty of time to get their systems ready for the changes associated with the standard. But companies may need to consider what the standard means for them much sooner in order to choose the appropriate transition method.”
The image below outlines a proposed timeline for consideration. For more information on how you can meet the new revenue recognition standard without disturbing your existing IT architecture, please email us at firstname.lastname@example.org or click here for more information.