The Accounting Policy & Practice Report ® provides financial accounting policy makers, advisors, and practitioners with the latest news, expert insights, and guidance on emerging, evolving,...
Companies should be ready by the third quarter to issue full, meaningful disclosures about the likely effects of new revenue rules on their financial reporting, accountants said May 8.
“I think it is definitely going to be an extremely hot topic as we get into Qs two and especially three,” Bryan Anderson, a Deloitte & Touche LLP partner, said at a Bloomberg BNA-Deloitte conference on revenue reporting.
In those disclosures, the staff of the Securities and Exchange Commission will be looking for much more substantive reporting on outlooks for applying the 2014 revenue standard—ASC 606. The rules are effective for public companies in January 2018.
The SEC staff also will be checking for clearer signs by companies of real progress in shifting to the new rules, Anderson and other accountants on a conference panel suggested.
The standard prescribes a new accounting regime on what is widely viewed as the most important line in the financial statements. The FASB rules portend big changes in financial reporting for many companies, if not material impacts on the timing for booking revenue and companies’ bottom lines.
SEC senior staff accountants have said for months that “transition disclosures” under commission rules should be more “robust” as the year progresses.
Putting numbers to more concrete estimates of revenue reporting impacts in the disclosures can be a sensitive topic with a company’s managers, said Randy Rasmussen, vice president and controller at Medidata Solutions, Inc., New York.
Worries about competitive harm come into play, he said.
“Management may not want to disclose anything and your auditor may want to disclose everything,” he said. “You have to find something’s that between those two.”
Rasmussen and Paul Vigil, senior director for revenue recognition at BMC Software, Inc., Houston, suggested that company accountants should prepare mock-up disclosures before the actual quarterly filing is made in July, or especially October. That would help prevent unwelcome surprises for those in the executive suite.
“It’s important to do that as early as possible,” Vigil said.
Those mock disclosures should identify “where the pain points are going to be,” as well as forecasting potentially contentious issues, he said.
To contact the reporter on this story: Steve Burkholder, reporting from Washington, at firstname.lastname@example.org
To contact the editor responsible for this story: S. Ali Sartipzadeh at email@example.com
Copyright © 2017 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)