A recent survey by PricewaterhouseCoopers (PwC) and the Financial Executives Research Foundation found that 78% of the financial executives polled said their companies have not yet attempted to even quantify the financial statement impact of the new revenue recognition standard. Explanations for the lack of preparedness ranged from organizations not believing there will be a significant impact on their financial statements (50 percent) to resource constraints (18 percent) and the need for additional guidance (14 percent).
Many of the respondents (83%) stated that they were still undecided on which method of adoption to choose for transitioning to the new standard. Two methods are available: a full retrospective method requiring that the standard be applied to each period presented; or a modified retrospective method requiring that the standard be applied to existing and future contracts as of the effective date.
As we have reported previously, the FASB and the International Accounting Standards Board have decided to defer the effective date for implementation for one year, (until 2018 for public companies), providing businesses with additional time to get ready. Based on the survey results, almost all of the companies will need this extra time as only 5% of the respondents said their companies have begun the actual implementation of new processes.
“This is arguably the biggest accounting change to happen in over a decade,” said PwC capital markets and accounting advisory services partner Dusty Stallings in a statement. “Given the levels of complexity involved, companies need to prepare and adequately plan for the new standard. But our research indicates that even after the delay in the new revenue recognition effective date, the overall state of readiness among corporate America appears to be lagging. Many companies do not yet even have a clear understanding of how the standard will impact their organizations, and given that likely impacts extend far beyond technical accounting, this state of unpreparedness is cause for concern. It is important that companies start an assessment and get well into it so that the level of impact can be properly evaluated—even if there is none.”
Rest assured Surgent CPA Review will provide the most up-to-date information concerning pronouncements and regulations within our course material. Candidates can be confident that they will be prepared for the CPA Exam, regardless of when they sit for the exam. For more information on the Surgent CPA Review course, visit SurgentCPAReview.com
Credit to Accounting Today for the original article.