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BLOGS
Why Workday Is Among the First to Adopt the New Revenue Recognition Standard
Read the blog by Workday CFO Robynne Sisco to learn how the new standard may impact your financial statements, how Workday was able to adopt ASC 606 so quickly and the critical insights gained during the transition.
A Practitioner’s POV: Preparing for Revenue Recognition Changes
If you are still using a legacy finance system, now is a good time to assess your technology. Learn specific and surprising ways a cloud-based system can make your transition to the new standards easier and more streamlined. Get direction on how to help support your entire organization moving forward.
ON-DEMAND WEBINAR
A Practical Approach to Adopting the New Revenue Recognition Standards
Watch this webinar to better understand the requirements and helpful ways practitioners like you are transitioning to the new standards.
INTERACTIVE DEMO
Click through this quick interactive demo and see firsthand how Workday makes understanding financial performance easy with configurable dashboards and embedded reports.
White Paper Revenue Recognition: Transitioning to the New StandardSponsored by Workday | July 17, 2017Read this whitepaper to better understand ASC 606 and IFRS 15, identify what you need to do to prepare for the transition, and find out how other companies are handling the change.
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TWEET
What is the new Revenue Recognition standard?
Recognizing revenue is one of the most fundamental accounting functions in any business — determining when and in what amounts to book revenue a company earns as a result of the products and services it provides to customers. The Financial Accounting Standards Board rewrote the rulebook on recognizing revenue, putting to rest hundreds of industry-specific narrow-scope provisions that had accumulated over years that created differences in how companies recognized revenue, making comparability difficult. The new five-step method FASB adopted in 2014 is meant to put all companies on a level playing field in terms of when and how they recognize revenue.
When does it go into effect?
Public companies are required to follow the new method beginning with annual periods that begin after Dec. 15, 2017, including interim periods within the first annual period. For calendar-year public companies, that means the guidance takes effect Jan. 1, 2018. Private companies have an extra year to comply, so they will follow the new guidance beginning in 2019.
Who is most affected by the new standard?
Every entity is affected by the new revenue recognition standard, which is widely regarded as one of the most pervasive accounting changes in modern accounting history. Even international entities will follow new rules adopted by the International Accounting Standards Board, taking effect along the same time line as the new GAAP standard. Because the standard replaced industry-specific methods for recognizing revenue, some industry sectors will see more change than others. Generally, companies that bundle products and services, like technology companies, or companies that engage in long-duration contracts, like construction entities, are expected to see the most significant changes.
Where are most companies when it comes to complying with this standard?
Although FASB adopted the standard in 2014, companies in large measure delayed adoption and implementation efforts for a few reasons. First, many companies believed the new standard would not significantly change their accounting outcomes, and therefore minimized their focus on the accounting process change that would be necessary. Second, many companies waited for FASB to complete a handful of adjustments to the standard to revise language that was leading to questions or confusion as companies worked through the requirements.
What is involved with becoming compliant with new revenue recognition requirements?
Accounting exerts have said companies need a robust, cross-functional process to review all aspects of how a business operates and determine what areas would be affected by the new requirements. Companies need to review their contracts with customers to determine how they will gather the data necessary to complete the new five-step method for recognizing revenue. They need to consider what accounting process changes are necessary, what systems changes or installations may be required to achieve the new accounting, and what internal controls would be necessary to assure the accounting is complete and accurate. They also need good controls and processes around the implementation itself, to assure they provide timely, complete, foretelling disclosures to investors about how the entity will be affected in advance of adopting the new standard.
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