You may have attended on September 13 th, 2016, Advisor Webcast: Revenue Recognition - A/R and Sales Accounting Changes are Coming. Whether you have or haven’t, I thought that it is an important enough topic to discuss here in the blog as well.
- Currently revenue recognized when invoice is posted to G/L
- Business processes and industry standards require the recognition of revenue separate from the invoice process
- New Revenue Recognition Standard to be in effect in January 2018
- Convergence of IFRS and US GAAP revenue recognition standards
- Common standard from the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB)
- Replaces all existing revenue recognition standards
- All industries and countries
- Exceptions are the Insurance and Lease Vendor industries
The Financial Accounting Standards Board and the International Accounting Standards Board initiated a joint project to clarify the principles to recognize revenue and develop a common revenue standard for U.S. GAAP and IFRS that would:
- Remove inconsistencies in revenue requirements.
- Provide a more robust framework for revenue.
- Standardize practices across entities, industries, and jurisdictions.
- Provide more useful information through improved disclosures.
- Simplify the preparation of financial statements.
More information can be found in knowledge document: ADVISOR WEBCAST: Revenue Recognition - A/R and Sales Accounting Changes are Coming (Doc ID 2153199.1).