Accounting Standards Codification 606, Revenue from Contracts with Customers, took effect for non-public entities in 2019, and accountants faced with applying this standard for the first time are encountering significant challenges. If CPA firms are asked to help their attest clients, independence issues must be considered.
The American Institute of Certified Public Accountants’ Code of Professional Conduct includes a section on independence and, specifically, a provision about providing non-attest services to attest clients, which states independence will be impaired unless threats to compliance with independence rules are reduced to an acceptable level. Such threats include management participation, self-review, and advocacy. Because revenue recognition is so pervasive to the financial statements, accountants must be particularly careful when working on ASC 606.
