Finance executives in the United States expect modest difficulty implementing the sweeping, global changes in revenue recognition that are coming their way, according to a new survey.
In the second-quarter American Institute of CPAs Business and Industry Economic Outlook Survey, released Thursday, CPA executives explained their expectations for the assimilation of the new revenue recognition standard into their accounting and business processes and systems.
Among those who will be affected and expressed an opinion, more than one-third (36%) said it will be neither difficult nor easy to assimilate. Another 36% said it will be at least somewhat difficult to assimilate. Just 6% said it would be difficult, but 30% said it would be somewhat difficult to assimilate.
Twenty per cent said it would be moderately easy to assimilate, and 8% said it would be very easy to assimilate.
Nearly one-third (32%) of the survey respondents said the new standard will not affect their company’s revenue recognition practices, and 14% said they don’t know what the effect would be.
The US Financial Accounting Standards Board and the International Accounting Standards Board are scheduled to release the new standard within a few months. The standard, as proposed, would call for revenue recognised to represent the amount a company expects to be entitled to receive in exchange for the transfer of promised goods or services. A five-step process has been proposed to identify the amount.
The boards have tentatively decided that the standard will take effect for reporting periods beginning on or after January 1st 2017, to give entities time to update their software systems and processes.
Andrew Barbe, CPA, CGMA, vice president for accounting and senior controller for Texas-based NorTex Midstream Partners LLC, plans to spend extra time with his staff so that they will be fully engaged and understand the impact of the new guidance.
“It will have impact,” Barbe said. “…I think with the new guidance coming through, we’re going to be able to meet that for the most part already as it stands today, but it will add some complexity to what we do.”
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine senior editor.