Tag Archives: new revenue recognition standard

New revenue recognition standard—are companies overlooking the disclosures?

by Cydney Posner

The warnings are everywhere—it’s time to get serious about revenue recognition. The new standard is expected to result in significant changes to measuring, recognizing and reporting of revenue—regarded as the key line item in the financials for most companies. While the impact of the new standard will be certainly be felt on the bottom line for most companies, even when the new rule is not expected to have any material impact on the financials, the related disclosures may well be material, according to Sylvia E. Alicea, Professional Accounting Fellow, Office of the Chief Accountant, in remarks at the Bloomberg BNA Conference on Revenue Recognition.  Moreover, the SEC is expecting to see robust transition disclosures by the third quarter of this year, and the staff is watching closely. Continue reading

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New revenue recognition standard— don’t ignore the impact on compensation

by Cydney Posner

At the recent Bloomberg BNA Conference on Revenue Recognition,  a Deloitte partner observed that, to the extent that, in awarding compensation, companies use metrics that are keyed to revenue, the new revenue recognition standard could affect compensation or bonus plans because the ways of measuring and the timing of recognition of revenue change. He reminded attendees that, “‘when those plans were put into place, whatever they were, they overlap years. You then have the question of, ‘they set up some sort of benchmark and we’re going to pay someone a bonus based on how they do against this metric’— the problem is that metric was designed based on the old rules and you basically changed how you’re going to keep score.’” (See this article in Bloomberg BNA.) Continue reading

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Audit committee oversight of the new revenue recognition standard: Center for Audit Quality comes to the rescue

by Cydney Posner

As discussed in this PubCo post, the SEC’s Office of the Chief Accountant has continued to beat the drums to encourage companies and their audit committees to hunker down and address the impending effectiveness in 2018 of the new revenue recognition standard, particularly with respect to assessment and implementation of the new standard and transition disclosures necessary to help investors assess the impact of the new standard.  For some companies, the undertaking can be enormously challenging, which may explain why the SEC’s encouragement appears to be necessary. A 2016 PwC survey showed that 22% of respondents had not even started the assessment, 65% were in the assessment phase and only 13% were in the implementation phase. And for those in the assessment phase, 59% were not that far along — barely halfway or less.  With regard to disclosures, according to the WSJ, only 15 companies in the S&P 100 have included transition disclosures in their most recent quarterly reports. Continue reading

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SEC Chief Accountant and staff speak at AICPA National Conference

by Cydney Posner

Earlier this month, at the 2016 AICPA conference on current developments, the SEC’s Chief Accountant and several staff members of his office shared their insights on a variety of key accounting topics, among them the following: Continue reading

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SEC staff continues to admonish companies on problematic use of non-GAAP measures

by Cydney Posner

In remarks today before the 2016 Baruch College Financial Reporting Conference, SEC Deputy Chief Accountant Wesley Bricker discussed one of the SEC’s topics du jour, non-GAAP reporting.  Recently, the SEC and staff (Chair White, Chief Accountant James Schnurr, Corp Fin Director Keith Higgins) have been barnstorming the country, wagging their collective fingers about abuses of non-GAAP measures. White has also hinted at the possibility of future rulemaking (see this PubCo post), and the head of the SEC’s Financial Reporting and Audit Task Force has previously indicated that the SEC was looking at the use of these non-GAAP measures “with an eye toward possible enforcement cases.”  (See this PubCo post.) Now Bricker has taken the baton, reiterating and extending those admonitions about practices the staff considers to be dodgy.  Continue reading

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SEC Chief Accountant addresses the new revenue recognition standard in the context of the life sciences industry

by Cydney Posner

In late March, SEC Chief Accountant, James Schnurr, delivered remarks before the 12th Annual Life Sciences Accounting and Reporting Congress.   The remarks addressed the new revenue recognition standard and internal control over financial reporting as applied in particular to life sciences companies, and also cautioned companies regarding non-GAAP financial measures. Continue reading

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Are companies making progress in preparing for the new revenue recognition standard?

by Cydney Posner

As former Corp Fin Director John White observed during the PLI Securities Regulation Institute last week, the new revenue recognition standard will represent a massive change for many companies. Perhaps with that in mind, SEC Chief Accountant James Schnurr, in an October speech before the UCI Audit Committee Summit, noted that, “the effective date of the standard will be upon us before you know it.” Continue reading

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