background image
S
everal years ago, the Financial
Accounting Standards Board
(FASB) passed Accounting
Standards Update 2014-09, Revenue
from Contracts with Customers (ASU
2014-09).
The standard replaced existing diverse
revenue recognition models with a sin-
gle five-step analysis that will be used
by all companies to determine when to
recognize revenue. The standard also
contains disclosure requirements that
may result in additional quantitative
and qualitative discussions about how
revenue is recognized.
The impacts of adopting the new stan-
dard will be far reaching and, in some
cases, will require significant effort by
companies to prepare. So, with imple-
mentation deadlines fast approaching,
it is more important than ever for fi-
nancial statement preparers to assess
the impact of the new rules and put an
implementation plan in place.
Hopefully at this point, most financial
statement preparers recognize the
immediacy of the FASB's deadlines.
Public companies must apply the new
standard for annual reporting periods
beginning after December 15, 2017,
while nonpublic companies must ap-
ply the new standards for annual re-
porting periods beginning after De-
cember 15, 2018.
Any companies that have not already
begun the process should certainly
make it a priority to understand the po-
tential impact of the new standard and
to develop an implementation work
plan. Financial statement preparers
should keep in mind that, in addition
to potential impacts on the timing of
revenue recognition, the new standard
requires disclosures that may necessi-
tate capturing and disaggregating cer-
tain information in new ways.
Make Sure You're Prepared for the
FASB Revenue
Recognition Standard
By Marcus R. Harwood, CPA, MSPA, Partner, BlumShapiro
While the magnitude of the impact will vary from company to company, below are some common
indicators of the level of effort that may be required to implement the standard:
Revenue Streams
Revenue Cycle
Contract Modification
Lines of Business
Base of Operations
Deliverables
ERP Systems
Many
Long
Many
Many
Global
Multiple
Many
Single
Short
None
One
Local
Single
One
Less Time
More Time
www.ctcpas.org
18