Revenue Recognition Implementation
Revenue recognition is an accounting technique that describes how revenue and accounting can be used to give the same meaning interchangeably. As stated by the Financial Accounting standards board (FASB), the main objective of revenue recognition is to provide a report about financial statements, timings, and the amount of revenue from customers. However, there have been many changes related to FASB’s new revenue recognition standards that have been significant for many companies (Benavides 2015). Due to its implementation, they are attaining process improvements and useful data. According to the survey that was conducted by EY around October and November, 88% of 300 companies faced many challenges in acquiring new financial disclosures required data under the new standard. Concerning CIOs and 300 CFOs survey from the US, the companies with yearly proceeds from $750 million to $10 billion indicated that the implementing standards cost both public and private companies’ $3.3 million. Don't use plagiarised sources.Get your custom essay just from $11/page
According to 2017 EY, the survey estimated that implementation changes cost for 55% of IT and finance professionals would amount not more than $1 million. Even with those challenges, the survey pointed out that 94% of CIOs and CFOs over the long duration, the changes in revenue recognition implementation will bear a value return of 62% exceeding the investment of last year. Through an interview, loïse Wagner, CPA, EY Americas accounting change leader for revenue recognition indicated that many clients use new guidance in reinventing accounting processes. The main objective of FASB’s revenue recognition standard was to replace industry-specific guidance that would bring affinity across borders. As specified by the 2018 EY survey, 55% of respondents have established that there will be changes in developing procedures and new accounting policies. Wagner also stated that there is a piece of information wealthy that is publicly available; thus, many private companies should glance at public companies and learn from them more so in reporting areas. According to Wagner, when a company has certain limits of resource allocation, revenue recognition, and leases, the new accounting standards may have some impacts. In general, companies have taken advantage of long-term technology solutions to simplify, optimize, and review their processes. This has resulted in the replacement of Excel spreadsheets, thus improving the data quality and business insights.
References