Every business owner must adopt and adhere to the new revenue recognition guidance, which is designed to detail the specifics of an entity’s revenue. The new guidance was effective as of January 1, 2018 for public entities with calendar year ends. For all nonpublic entities with calendar year ends, the new guidance is effective in the year ending December 31, 2019. Adopting the required disclosures is one area of the guidance that will be especially difficult for entities to accomplish without help from accounting professionals. The complexity of the process and time required to implement this new guidance varies. Factors that will impact the process include the type of industry, the reporting options an entity’s accounting software has available, and whether your sources of revenue are properly categorized.
After reviewing a client’s prepared financial statements, DGC informed them that they are now required to comply with the new revenue recognition guidance as they are considered a public entity. Because of the complexity of the requirements, the client expressed concern about how to take the necessary steps to adhere to the guidance. Our team worked closely with the client to examine the client’s data, and determined their revenue fell into three separate revenue streams.
DGC advised the client’s team, showing them the steps necessary to prepare their notes to the financial statements in order to adhere to the guidance. Our team collaborated with the client’s internal accounting team to gather the relevant data. DGC then compared the client’s industry and services side-by-side with the accounting guidance to ensure every required disclosure was met.
Once the notes to the financial statements were completed, DGC met with the client to answer any questions or address any concerns about the process. The client’s management team approved and implemented the notes to the financial statements in full compliance with the guidance.
If you have questions or concerns about the revenue recognition process and how it impacts your business, contact a member of your DGC client service team or Donny Butler, CPA at 781-937-5137 / firstname.lastname@example.org.