Ease into a post-ASC 606 world
ASC 606 is here, and that means all public and private companies must now abide by a single revenue recognition model. The new accounting standard was created jointly by the Financial Accounting Standards Board and the International Account Standards Board to eliminate inconsistencies in existing revenue-reporting requirements — but at a cost to “business as usual” for countless organizations.
At CFGI, our revenue-recognition experts can help businesses adjust their workflows to not only comply with the new reporting requirement but ultimately transform revenue accounting for the better in a post-ASC 606 world.
Preparing for your transition
ASC 606, also known as “Revenue from Contracts with Customers,” affects how businesses report the nature, timing, amount and uncertainty of all revenue from contracts with customers. Sales, HR, IT and other functions outside of finance and accounting are also influenced by the new standard.
Some industries are disproportionately affected, particularly those that have highly variable contracts such as subscription-based software providers.
Private equity firms are hit especially hard since a change in the timing of portfolio companies’ revenue recognition can influence debt covenant compliance, anticipated EBITDA, mergers and acquisitions activities, IPOs and much more.
How CFGI helps
Achieving ASC 606 compliance is chiefly a matter of getting the right information to the right internal and external stakeholders at the right time. This is easier said than done, particularly for businesses that still rely heavily on spreadsheets and legacy systems.
But through a combination of technical accounting proficiency and IT expertise, our experts can help your business ease into compliance with the new revenue-recognition standard in three core phases:
1. Scoping memo and sample approach
Start by identifying all of your company’s revenue streams and understanding the current accounting and reporting methods used across the organization. Isolate customer arrangements that can be used for further analysis in phase two of the transition.
2. Technical assessment
With CFGI’s help, assess your contracts with the goal of developing a ruled-based framework for your accounting policies. Our experts also assist in making recommendations at this phase for which adoption methodology — modified retrospective or full retrospective — makes the most sense.
It is important to understand the impact that ASC 606 will have on sales, treasury, policy and controls, and IT, and to plan for how to deal with them. CFGI’s cross-functional technical accounting experts can help you get a full picture of ASC 606’s implications and provide recommendations for how to streamline data management, improve data integrity and ultimately use adoption as a transformational opportunity with long-term benefits.
3. Financial reporting and disclosures
Start preparing financial-statement, adoption and post-adoption disclosures. Under guidance from the experts at CFGI, your company will have a much easier time gathering and reviewing the quantitative and qualitative information needed to comply with the new disclosure requirements.
Consult CFGI’s experts to turn ASC 606 into a transformational opportunity.