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Tick Tock: Is your company ready for ASC 606 and IFRS 15?

08/03/2017

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By: Glenn Sharp, Intacct Practice Manager at LBMC Technology Solutions

The clock is quickly ticking down for many financial executives, for both private and public companies, to make changes to their revenue recognition process before the rules change in 2018. Executives who once thought they might be exempt are finding out that the AICPA determined who is affected by these new rules as: “The revenue recognition standards affects all entities – public, private, and not-for-profit – that either enters into contracts with customers to transfer goods or services or enters into contracts for transfer of non-financial assets”.

The new standards from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) go into effect for public companies in 2018 and private companies in 2019. These new standards requires companies to reallocate revenue each time a customer contract changes, and defer expense recognition to align with the contract’s delivery.

This means that contract add-on and renewals must be integrated into a single contract which will trigger re-allocations across both past and future periods. The result will be continuous changes to revenue allocations and expense alignment. The goal of these changes is to increase financial statement comparability across companies, while reducing the complexity that currently resides in today’s revenue recognition guide lines.

Thankfully, in June 2016, Intacct released the Contract and Revenue Management module. This module fully addresses all of the upcoming rules for revenue reallocation and expense amortization. The solution was designed to make companies audit-ready while providing continuous insights needed to make a company’s financial future predictable. The new module enables companies to simultaneously manage revenue using both current and new accounting guidelines which allows them to operate under both standards. This simultaneous management is important because companies that have current contracts that stretch past the start time of the new rules are obligated to report from both standards.

Intacct Contract and Revenue Management enables finance teams to:

  • Automate complex processes for addressing all new ASC 606 and IFRS 15 rules for revenue reallocation and expense amortization
  • Disclose the impact of changes with confidence with automated dual treatment at the transaction-level
  • Solve the most onerous requirement for transitioning to the new rules with automated dual reporting
  • Clearly see the impact of the new rules on the company’s future results with revenue and expense forecasts based on both current and new guidelines
  • Automate complex subscription billing, including usage-based billing, with full integration to revenue recognition
  • Ensure the business will track according to its operational model using instant insights into SaaS metrics

Learn more

LBMC Technology Solutions has already helped many companies transition over to the new contracts module and thereby comply with the ASC 606 and IFRS 15 guidelines. If you would like to learn more about Intacct or how these changes might affect your company please visit our website or contact us.