Introduction: The New Revenue Recognition Standard in a Nutshell
It’s no question that revenue recognition is the financial reporting and compliance buzzword du jour.
In a nutshell, the conveniently abbreviated “rev rec” ASU calls for replacing the outdated and highly dissimilar US GAAP and IFRS guidance on revenue recognition with a uniform method for reporting revenue, specifically where it concerns contracts with customers.
The aim is to provide a more accurate and transparent view of how companies across industries (and the globe) treat this critical metric in financial statements. While the first official call to improve the practice of recognizing revenue was made well over a decade ago, things really started to heat up in May 2014 when the FASB and IASB tabled the final joint revenue recognition standard. This change will impact every single reporting entity in varying degrees, but for most, implementation will be a major undertaking.
Thus, the past 15 months have borne witness to an endless parade of articles from business publications, regulatory bodies and industry experts that have dissected, updated and made arguments for (or against) the advancement of this proposal.The volume of these articles is informative at best and overwhelming at worst. It’s become a bit of a tangled web, to say the least.
That’s why DisclosureNet is launching a three-part blog series that tells the whole rev rec story pulled from various sources in a simple, concise format. The series will cover everything you need to know about the new standard:
1. The 5Ws: What, who, why, where and when
2. The Timeline: The life cycle of the new standard from inception to today
3. Tips and Tricks: To assist you with preparation and implementation
Stay tuned for the first post in the series: The 5Ws of the New Rev Rec Standard