A recent article in Compliance Week paints a different picture from people who think that adoption of Revenue Recognition per ASC 606 is behind us. Even though the new standard took effect on January 1, 2018, the issue of compliance as seen by auditors and the SEC is now just ramping up.
Public companies on
Some highlights from the article include:
According to Eric Knachel, a senior partner at Deloitte and Touche, the two most commonly used words appearing in SEC comment letters thus far are "expand and clarify".
For those companies that implemented RevRec using
Sean Prince, a senior manager in the national office at Crowe, says the general message he’s hearing is that companies need to improve their disclosures, especially around significant judgments under the new standard. Comment letters seem to suggest the SEC staff is not clear on how companies are arriving at their conclusions, he says.
Here again, the lack of an integrated RevRec compliance methodology that leverages flexible analytics capabilities can make it very difficult for companies to "show their work" to help the SEC understand how the conclusions were reached.
SEC staff reported to audit firms via the SEC Regulations Committee at the Center for Audit Quality that they hope to see better disclosures at year-end than they’ve seen so far in first- and second-quarter reports.
Companies that have already taken advantage of an advanced solution such as SAP Revenue Accounting and Reporting (RAR), will have the agility to adapt and expand their reporting relatively quickly, but those that are using off-line ad hoc methods will not.
While the article carries an important message, it doesn't have to be frightening, even if you haven't yet implemented an integrated RevRec solution.
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