Revenue recognition

How do you get started on the journey?

Acknowledging the differences between public and private companies and the additional practical expedients available to private companies, the adoption journey for private companies will generally mirror the journey that public companies have taken. Therefore, private companies should familiarize themselves with their public company counterparts to benefit from best practices, lessons learned, common pitfalls, etc. The standard has broad implications and may affect many parts of your organization: financial statements, business processes, taxes, and internal controls over financial reporting. It requires the collaborative efforts of multiple departments within the company, including financial reporting, IT, sales, tax, investor relations, human resources, and others. Read on to learn what your organization can do to get started now or to continue down your current path toward implementation.

Addressing some areas of the FASB revenue recognition standard may require longer lead-time particularly those related to revenue or billing systems where separation and/or allocation changes may be required, so companies should perform a preliminary analysis of the new requirements as soon as possible.

Effective first steps to consider as you begin to evaluate the implications of the new FASB standard may include:

• Evaluating significant revenue streams and key contracts to identify the specific revenue recognition changes required and the specific business units where these changes may have the greatest impact
• Addressing the longer lead-time areas where new calculation engines or revised allocation processes may be required
• Establishing a granular project plan and roadmap to manage the effort across multiple business units and countries

For an in-depth review of Deloitte’s Roadmap, which includes our interpretation of the new standard, please visit our Roadmap series page or subscribe to receive Roadmap series publications via e-mail. Email us directly at RevRec1@deloitte.com with any questions or to request a meeting with one of our revenue recognition specialists.

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Why is this important to your company?

Jointly issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board, the revenue recognition standard will supersede virtually all existing revenue recognition guidance in Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS). The intent of the new standard is to replace the existing guidance with a single industry-neutral revenue recognition model that will reduce complexity and increase financial statement comparability across companies and industries. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance.

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Recent content:

• Where do you stand
  
• ASC 606 / IFRS 15 Implementation Insights
  
• What private companies should know about the new revenue recognition standard
  
• Industry spotlight series
  
• Adopt ‘Plan B’ to be ok with revenue recognition standard (June 19, 2017)
• Revenue Recognition Roadmap and Executive Summary
  
• Revenue recognition: The way forward
  
• Internal control considerations related to adoption of the new revenue recognition standard
  
• Applying judgment in a principles-based model for revenue recognition
  
• Revenue recognition implementation for a private company
• Revenue recognition: What private companies can learn from public companies implementation experience
  
• Flexible consumption models: Implications under the new revenue standard and beyond (December 2017) (PDF)

• Cost optimization

• Digital controllership

• Lease accounting

• Additional resources from the Center for Controllership™
  

Please visit the Deloitte Accounting Research Tool website for a more comprehensive collection of news and Deloitte publications related to the new revenue recognition standard, ASC 606-related guidance on revenue-generating activities, and guidance on the converged IFRS and GAAP standards.

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Get in touch

Bryan Anderson Partner | Deloitte Risk and Financial Advisory +1 212 436 4914 Twitter | LinkedIn			Tom H. Fernandez Managing Director  Deloitte Tax LLP +1 214 840 7398 LinkedIn
Schaffer Hilton  Principal  Deloitte Consulting LLP +1 404 220 3226			Eric Knachel Partner | Deloitte & Touche LLP +1 203 761 3625
Andrew Hubacker Partner | Audit & Assurance Deloitte & Touche LLP +1 313 394 5362