In his recent remarks to the Annual Life Sciences Accounting and Reporting Congress, the SEC Chief Accountant, Wesley R. Bricker, underscored the importance of urgency on implementing new Revenue Recognition standards.
He placed particular emphasis on making sure that "appropriate transition disclosures are being made so that investors and other market participants have sufficient time to absorb the anticipated effects of the new standard."
Here are some other key highlights from his remarks:
"Timely implementation of the new revenue standard is important. Since my remarks in December 2016 when I said the overall state of readiness may be lagging, progress has been made, but there is still more to do.
Revenue is one of the single most important measures used by investors in assessing a company's performance and prospects, regardless of a company's industry, the nature of its securities, or the capital markets it accesses. Revenue impacts key analytical ratios and bottom line earnings. Companies cannot afford to get the accounting wrong – it deserves close attention by preparers, audit committees and auditors.
The standard, including the disclosures in accordance with the standard, is an important step forward in financial reporting, both domestic and foreign, and when implemented, it is designed to enhance the comparability of companies' reported revenues."
Regarding the state of progress toward implementation, he said:
"In the worrisome column, however, some companies need to make significant progress this year in their implementations. In a survey of public companies released in October 2016, eight percent of respondents at that time had not started an initial assessment of the new revenue recognition standard, while an overwhelming majority of the others were still assessing the impact.
Particularly for companies where implementation is lagging, preparers, their audit committees and auditors should discuss the reasons why and provide informative disclosures to investors about the status so that investors can assess the implications of the information. Successful implementation requires companies to allocate sufficient resources and develop or engage appropriate financial reporting competencies.
Successful implementation requires the engagement of senior management throughout an organization. If there are individuals within your organization that underestimate the efforts required, or the overall importance of a successful implementation of the new revenue recognition standard, you might consider sharing some of our staff remarks on the topic"
To learn more about getting #RevRecReady and for guidance on handling Disclosure Reporting during the transition, visit Bramasol's Resource Center or click the link below to request a RevRec Consultation.