Revenue Disclosures Tougher Than Expected, Companies Tell PwC

Stay current on changes and developments in corporate law with a wide variety of resources and tools.

By Steve Burkholder

Companies are finding new disclosure requirements about revenue to be much more difficult than expected, auditors at PricewaterhouseCoopers LLP say.

Companies should therefore get started soon in preparing for expanded footnote reporting disclosures before sweeping financial accounting rules on revenue take effect next year, or risk Securities and Exchange Commission scrutiny, the PwC accountants said March 15. The disclosure rules will start for most companies Jan. 1, 2018.

The disclosure prescriptions proving to be most pesky are those focusing on changes in the balances of contracts that generate revenue and on the amount of revenue expected to be booked from existing contracts, said Lindsey Morris, a senior manager in the Big Four firm’s national professional services shop.

Gather Information Now

Companies should intensify gathering the information needed for the quarterly and annual disclosures “well ahead of adoption next year,” PwC’s Beth Paul, a leader in the firm’s accounting services group, said in a March 15 webinar on the PwC’s first-quarter 2017 accounting outlook.

“There’s a lot of information that needs to be pulled together,” Morris said. PwC advises companies to build their assessments of the new disclosure tasks into the core job of gauging the accounting impacts of each of their revenue streams.

Main Disclosures

Morris noted several main revenue disclosure requirements that merit advance preparation:

  •  the opening and closing balances of receivables, contract assets and contract liabilities from customer contracts;
  •  information about the company’s remaining performance obligations;
  •  revenue booked in the reporting period that was included in the contract liability balance at the start of that period;
  •  revenue recorded in the period from performance obligations satisfied—partially or fully—in prior periods; and
  •  revenue information broken down in specific ways.

Companies Seem Further Along

PwC found in an early March study of disclosures made by Standard & Poor’s 500 companies—under guidance of the SEC staff—that many of those companies are much further along in preparing for the advance of the far-reaching revenue accounting rules than they were in 2016.

Very few companies have signaled that they will opt to apply the FASB rules early, in this year, said PwC’s Diane Howell, a partner in the firm’s National Professional Service’s Group.

Smaller enterprises, along with non-profit entities, will have to apply the new rules of the Financial Accounting Standards Board (ASU 2014-09; ASC 605) starting in 2019.

To contact the reporter on this story: Steve Burkholder in Norwalk, Conn., at

To contact the editor responsible for this story: S. Ali Sartipzadeh at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Corporate on Bloomberg Law