It’s crunch time for private companies on revenue recognition
It’s understandable that the Financial Accounting Standards Board’s (FASB) new revenue recognition standard might not be top-of-mind for private company finance personnel despite the impending effective date.
The standard takes effect for private companies for annual reporting periods beginning after Dec. 15, 2018, and interim periods within fiscal years beginning after Dec. 15, 2019. So effectively, private companies must adopt by the 2019 year end.
That doesn’t give them much time to work on implementation, but it’s still easy for them to overlook the importance of this new standard.
“If you have a company, there are other priorities,” said Mike Westervelt, CPA, a principal with CliftonLarsonAllen in Charlotte, N.C. “Cash flows, running the business, a whole host of other things take priority over an accounting standard.”
In this case, it may be tempting to give minimal attention to the implementation because the timing and amount of revenue that companies report under the new standard may not be much different from the previous numbers.
But it may take a lot of work to generate those numbers under the new standard. In what can be a painstaking undertaking, companies have to take their data through the five-step process described in the standard and report accordingly.
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From a November 2, 2018 post on the Journal of Accountancy website.