However, many have not fully internalized the impact this will have on their budgeting and planning for 2018. And another requirement that most companies have not fully internalized is the impact on their reporting disclosures.
What the Experts are Saying
This angle on revenue recognition was recently highlighted in a CFO.com article authored by Eric Knachel, the senior consultation partner for revenue recognition in the National Office Accounting Services of Deloitte & Touche LLP.
In the article, Mr. Knachel highlights how the FASB’s new standard significantly increases the amount of information companies are required to disclose about their revenue activities and related transactions. To comply, a company will likely need new processes, procedures, and controls for:
- Gathering data
- Identifying applicable disclosures (based on relevance and materiality)
- Preparing/reviewing disclosures and related information
It will also require information systems and personnel to support disclosure-related activities. Establishing and testing all of these elements will likely require significant time, money, and effort.
Although the new disclosure requirements don’t take effect for many companies until 2018, that doesn’t mean they can wait until the end of next year to deal with them. As the new guidelines go into effect in 2018, publicly held companies will need to start disclosing the details in their Q1 2018 SEC filings.
This could present some major challenges since many companies already struggle to meet their filing deadlines. Add in the time and effort required to satisfy the new disclosure requirements – along with the potential for problems and delays in collecting, preparing, and reviewing disclosures and related data – and the result could be late filings, internal control implications, or both.
To learn more, check out the CFO.com article titled “Revenue Recognition Disclosure Requirements: A Challenge That Can’t Wait.”