Businesses will soon face a whole new set of requirements for recognizing revenue. The new Accounting Standards Update (ASU) 2014-09: Revenue from Contracts with Customers, which goes into effect in 2017, was created jointly by the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board. It provides a single standard for all industries, streamlining the revenue recognition process as a whole.
The intent of the new standard is to simplify the way companies book revenue, but it will require an increased granularity in determining performance obligations, as well as additional management judgment in many areas. ASU 2014-09’s impacts in the areas of systems and processes will be significant, especially for organizations using older, on-premise ERP and financial systems that lack the flexibility and customization capabilities necessary to adapt. Or worse, using spreadsheets and manual calculations that inherently introduce the risk of failing to comply.
Moving to the new standard successfully requires careful planning. A good place to start your preparation is to join the September 25th webinar, "Embracing the New Revenue Recognition Standard: Keys to a Successful Transition." During the webcast finance and public accounting leaders will provide practical guidance on how to adapt business processes and systems in preparation for the changes. Trang Hoang, a partner with Deloitte and Dan Miller, VP of Finance and GM of the Software Vertical for NetSuite will discuss the implications of ASU 2014-09 and the key issues CFOs, controllers and other executives need to consider when preparing for the sweeping changes. Stephany Zamora, director of financial operations at Hortonworks, an Apache Hadoop developer and distributor, and NetSuite customer, will share her experiences automating revenue recognition at a hyper-growth technology company.
For example, a few of the concerns CFOs will need to address include:
- Companies with complex, multi-element arrangements must develop new processes to track and allocate the costs of those different components to be in compliance with ASU 2014-09.
- The need to calculate revenue under existing GAAP, as well as the new standard, during the transition period. That means you'll need an ERP application that combines complex revenue recognition capabilities and multi-book (sometimes referred to as parallel books) functionality.
- The impact ASU 2014-09 will have on a wide variety of financial operations, such as expense matching, sales compensation, and communicating with investors and the board of directors.
To get the full scoop on what accounting and financial systems experts say about preparing for ASU 2014-09, register for our upcoming webinar, Embracing the New Revenue Recognition Standard: Keys to a Successful Transition.