Will Your Organization Be Ready For The Deadlines?
With 2017 almost behind us, a sense of anticipation pervades the air. All eyes are on the IASB (International Accounting Standards Board) and
Private companies that report under GAAP (Generally Accepted Accounting Principles) need to adopt the new rules after December 15, 2018. So, if your reporting period begins on January 1, 2019, your company will need to show compliance by 1/1/2019. Public entities that report under GAAP need to be in compliance after December 15, 2017. If your reporting period starts in January, your company will need to be compliant by 1/1/2018.
Entities that report under IFRS must comply with the new revenue reporting standards on or after January 1, 2018.
It is worthy of note, however, that CFOs and CIOs demonstrate a significant difference of opinion regarding their industry's compliance progress. According to
In the same survey, 71% of CFOs report that their companies have yet to implement the ASC 606 or IFRS 15 standards. Another 34% of CFOs report that their organizations are at risk of missing the deadline for compliance altogether. The consequences of non-compliance, however, may prove costly in terms of reduced stakeholder and shareholder confidence.
Based on the new standards, investors will be privy to revenue backlog disclosures, a metric that provides further clarification regarding a company's business operations. By extrapolation, investor reliance on revenue backlog metrics as an ROI gauge will likely increase, especially for SaaS-based businesses. So, compliance is imperative, sooner rather than later.
Why The FASB & IASB Created The New Rules.
Because the GAAP standard allows different industries to follow their own procedures in complying with reporting regulations, there is a wide discrepancy in accounting measures used for similar economic transactions.
So, the FASB and IASB created the new ASC 606 and IFRS 15 standards to:
- provide a more substantive framework to address complex revenue issues.
- provide improved disclosure requirements to users of financial statements.
- reduce the number of regulations companies must comply with during the financial reporting process.
- remove inaccuracies and flaws in the existing revenue reporting framework.
- reform and standardize revenue recognition practices across industries.
Which Industries Will The ASC 606 and IFRS 15 Impact?
The ASC 606 and IFRS 15 establishes
Industries represented on the task forces include those that will be impacted by the new standards, especially the airline, healthcare, software, finance, insurance, construction, and utility industries.
The best way to comply with the new standards is to deploy a
How Intacct Can Facilitate The Compliance Process.
Intacct's comprehensive automated system spares you the challenges associated with spreadsheets. You won't need to make manual adjustments or navigate complex business reports. The Intacct SaaS dashboard shows key business metrics such as customer churn, revenue churn, and customer acquisition costs. Intacct effectively puts control of the compliance process back into the hands of CFOs.
If you are interested in how Intacct can make the transition to the new standards error-free and timely,