Businesses may require additional resources to prepare for new revenue recognition standards as deadline looms; CPA firm tackles issue at unique workshopÂ
IRVINE, Calif. (June 26, 2018) – Though most middle-market financial executives expect the upcoming revenue recognition changes to impact their business on a variety of levels, a large majority of them have not yet begun to implement the necessary changes, according to a new survey of private companies in Orange County, Calif., conducted by Haskell & White LLP.
The data was collected in anticipation of the firm’s Revenue Recognition Workshop on May 23 where a diverse group of top financial professionals, overseeing budgets from $20-300 million in revenues, gathered to learn about the accounting requirements that take effect next year for private companies (assuming calendar year-end). Haskell & White, one of Southern California’s largest independent CPA firms and a specialist in middle-market revenue recognition, held the workshop featuring presentations by its managing partner, Wayne Pinnell and senior manager, Hogi Kurniawan.
The Financial Accounting Standards Board announced the changes several years ago, but of those surveyed, only 11 percent reported as having implemented or being in the process of implementing the necessary changes.
“This is a very concerning finding because so much has to be done in a very short amount of time,” Pinnell said. “The new rules are quite expansive and will require new organizational processes to be put in place – not just to the financial statements but standard operating procedures – as the FASB puts greater emphasis on more details, judgments and disclosures.”
When asked to rank the expected impact of the new standards on their companies’ “business and operational policies and/or procedures,” more than a third of those surveyed said the impact would be a four out of five, with five indicating “considerable” impact.
The revenue recognition changes could affect the top line as well. A quarter of the respondents said the impact on their companies’ revenues is expected to be a four out of five.
“The important takeaway is that CFOs, controllers and treasurers are widely acknowledging that revenue recognition needs to be addressed from an operational standpoint,” Pinnell said. “From an educational standpoint, despite the level of press on this issue, there is still more to do. The time is now to get to work on implementation.”
According to the survey, most of the difficulties with implementation are due to executives having limited resources to make the changes and needing help interpreting the technical accounting requirements of the new revenue recognition standards.
About Haskell & White LLP
Haskell & White LLP is one of the largest independently owned accounting, auditing and tax consulting Firms in Southern California, servicing public and private middle-market companies. With locations in Irvine and San Diego, Haskell & White combines the expansive services, knowledge, experience and reach of national and international accounting firms with the personal attention, responsiveness and value of a local organization. Haskell & White works with companies in a broad range of industries, including real estate, manufacturing, distribution, life science, technology and retail. The Firm provides solid expertise and services to its clients in the tax and audit disciplines, including advising SEC registrants and consulting on mergers and acquisitions. Further information on Haskell & White can be found on the Firm’s website, hwcpa.com. Connect with Haskell & White at facebook.com/haskellandwhite and twitter.com/haskellandwhite.