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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.

 

Business Problem

  • 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).

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