From EITF 08-1 to SAB 104, we have all witnessed the dramatic evolution of revenue recognition accounting standards. And as the FASB regulations continue to evolve with the revised exposure draft that will be applicable to almost all businesses, CFOs must stay ahead of the statutory requirements to ensure that their financials and ERP systems will adhere to the changing standards in discussion now.
On Wednesday, April 11th, the CFO RoundTable presented “Revenue Recognition Under Evolving FASB Standards” which reviewed the current status of the FASB project and industries in its scope, its projected impact on current accounting literature, and how these new requirements will impact business processes, accounting and financial systems.
Presented by Matt Svetich and Bryan McCorry, Senior Managers of KPMG’s Venture Capital Practice and Jim McGeever, Chief Operating Officer, NetSuite, our panel reviewed the history of revenue recognition accounting standards, the hot topics of interest in revenue recognition changes, and more.
Three main takeaways included:
These Practice Changes Are Significant
If the proposed accounting standard update is finalized in its current form, transaction- or industry-specific accounting guidance generally would be eliminated from U.S. GAAP, which would affect accounting for industries such as software arrangements, telecommunications, real estate, and more. Moreover, these proposed standards changes would affect collectibility, disclosures, multiple element arrangements, time value of money, and more.
Can You Say Retro?
While the projected effective date of the update is January 2015, retrospective adoption will be required, and may in fact require five-year selected financial data recast as early as January 1, 2011, and full financial statements and disclosures recast beginning January 1, 2013.
Siloed Spreadsheets Are No Longer An Option
In fact, spreadsheets in general are no longer an option. The complexity of the proposed standard and the coordination it will involve with all of your teams, including sales, finance, support and more, will push the boundaries of spreadsheets. Now is the time to consider an automated, centralized process with which to share, track and report on your financials.