Heading to the Polls to Prepare for Revenue Recognition

Heading to the Polls to Prepare for Revenue Recognition


Polling data on where public companies stand in complying with the upcoming revenue recognition standard suggests that they  will be rather busy leading up to January 2018--the effective date for implementing Accounting Standard Codification (ASC) 606, the new revenue recognition standard.

During several sessions of a Bloomberg BNA and Deloitte & Touche LLP, co-hosted revenue recognition conference on Monday, May 8, 2017, at the Newseum in Washington, DC, attendees described themselves as not being fully prepared for the new standard. 

Notably, zero percent of the respondents had completed a revenue recognition implementation plan, while 19% percent had not started their assessment plan. Up to 31% were implementing their assessment plan, and the remaining 50% were still assessing their implementation.

Furthermore, greater than 50% of the poll respondents had not established any budget for implementation, nor have they started to examine internal controls from a revenue recognition standpoint.

Why are companies still evaluating the ramifications of the new rules three years removed from the release of the revenue recognition standard? Perhaps there is complacency stemming from more than 50% of the respondents who do not expect a material impact as a result of the revenue recognition changes.

“The changes in the new revenue standard will impact nearly all companies,” warned Sylvia Alicea, Professional Accounting Fellow at the Office of the Chief Accountant with the Securities and Exchange Commission. She said “even if the extent of change on the balance sheet or income statement is not deemed to be material, the related disclosures may be material.”

Continuing on a similar theme, 45% of respondents had not yet started to assess their disclosure requirements simultaneously with their implementation standards and measurement principles.

Honing in on the importance of disclosures, Alicea said to include “significant reasonable judgments the registrant has made when applying the guidance,” but Eric Knachel, Senior Consultation Partner, Revenue Recognition with Deloitte, sees the most challenging part of the entire standard as applying “judgment versus consistency.”

When asked how a company is managing the resources needed to implement the revenue recognition standard, 44% of the respondents were leveraging existing resources, whereas 30% are hiring external resources, and only 9% were hiring additional full-time staff, with the remainder of respondents unsure.

In relation to implementation risks, Alicea said “risks may include whether the employees involved in the transition to new GAAP standards have the appropriate competencies to make the reasonable judgments required to faithfully apply the principles in the standards.” Companies are predominantly choosing to leverage existing resources, and that may be putting a strain on some company’s ability to effectively implement the new revenue recognition standard.


Which of the following best describes your current implementation status?    
Assessing 50%  
Implementing 31%  
Have not started 19%  
Completed 0%  
How is your company managing the resources needed to implement the rev. rec. accounting changes?  
Leveraging existing resources 44%  
Hiring external resources 30%  
Unsure 17%  
Hiring additional full-time staff 9%  
Do you expect the standard to have a material impact on your company's financial statements?    
No 52%  
Yes 36%  
Unsure 12%  
Have you started to examine internal controls from a revenue recognition stand point?    
No 55%  
Yes 38%  
Unsure 7%  
Has your company established a budget for implementation?    
No 56%  
Yes 28%  
Unsure 16%  
Have you started to assess your disclosure requirements simultaneously with your implementation standards recognition and measurement principals?  
No 45%  
Yes 36%  
Unsure 19%  



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