Tool for audit committees: Prepare for revenue recognition standard
FINANCIAL REPORTING INSIGHTS |
Recently, the Center for Audit Quality released a new tool to help audit committees assess a company’s implementation of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. The publication, Preparing for the New Revenue Recognition Standard: A Tool for Audit Committees, is organized in the following four sections to provide audit committees information that may be helpful as they fulfill their oversight responsibilities and interact with management and external auditors on the subject:
- Understanding the New Revenue Recognition Standard – What Is It?
- Evaluating the Company’s Impact Assessment – How Will Revenue Recognition Change?
- Evaluating the Implementation Project Plan – How Do We Need to Prepare?
- Other Implementation Considerations – What Else Do We Need to Consider?
For a public business entity, a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and an employee benefit plan that files or furnishes financial statements with or to the SEC, the new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, the new guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
Further information regarding the new revenue recognition guidance is available in our summary, Revenue Recognition: Overview of ASC 606.