T
he new revenue recognition
standard is coming, and it will
impact the processes companies
follow to recognize revenue from
customer contracts.
The impact goes beyond accounting
for revenue – it can have a broader
business impact on systems, income
taxes, compensation, budgeting and
forecasting, and your go-to-market
strategy. Yet our survey finds many
companies in Canada aren’t prepared.
Get prepared for the
new revenue recognition
standard
One-third of companies that responded
to our survey haven’t been able to
determine if the new guidance will
have a material impact on their income
statement or balance sheet. The reason
so many companies haven’t started is
that 67% reported that they believe
there’s sufficient time to prepare before
January 1, 2018. However, if the impact
assessment phase hasn’t even started,
companies aren’t in a position to know
what they’re dealing with, let alone
assess whether they can complete the
implementation successfully by the
required date.
Given the broad impact the changes
can have, these may be worrying
statistics. The implementation date was
extended from 2017 to 2018 because
the standard-setting boards received
feedback that the 2017 timeline didn’t
give enough time to address many of
the business and systems issues related
to this complex standard.
Those companies yet to start their
implementation process aren’t taking
advantage of this deferral period and
may be underestimating the challenge
ahead. Outlined below are three steps
companies can take to prepare for the
new revenue recognition standard.
Step 1: Get ready
Start the diagnosis. Assess the
impact of the new standard on
your systems, processes, controls,
and revenue accounting.
The time to start assessing is now.
Conducting the initial assessment will
help you determine the time, costs,
and resources required to comply. If
you know the level of impact, you
can plan, be prepared, and use your
time and resources effectively. You can
also start planning for the business
strategy and system changes that may
be required.
Working through the
details
At this point, most companies
aren’t sure of the actual impact and
complexity of the new standard.
The first assessment step will help
companies identify the impact and
scope. Only then can they actually
work through the details to identify the
changes to systems and contracts and
costs associated with implementat