Revenue Recognition
Navigate the ASC 606 Landscape With Confidence
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 specialize in assisting businesses to not only comply with the new reporting requirements but also to transform their revenue accounting practices for the better in a post-ASC 606 era.
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 revenue derived from customers. This standard also influences functions outside of finance and accounting, such as sales, HR, and IT. Certain industries, particularly those with variable contracts like subscription-based software providers, face a disproportionate impact.
Private equity firms, in particular, encounter significant challenges due to potential changes in revenue recognition timing, impacting debt covenant compliance, anticipated EBITDA, mergers and acquisitions, IPOs, and more.
How CFGI Helps
Achieving ASC 606 compliance primarily involves delivering the right information to the right internal and external stakeholders at the right time. This can be a complex task, especially for businesses heavily reliant on spreadsheets and legacy systems. However, leveraging our technical accounting proficiency and IT expertise, our experts can guide your business through three core phases of ASC 606 compliance:
Scoping memo and sample approach
Begin by identifying all revenue streams and understanding the current accounting and reporting methods utilized across the organization. Isolate customer arrangements for further analysis in phase two.
Technical assessment
With CFGI’s assistance, assess contracts to develop a ruled-based framework for accounting policies. Our experts provide recommendations on the adoption methodology that best suits your business—modified retrospective or full retrospective.
Understanding ASC 606’s impact on sales, treasury, policy and controls, and IT is crucial, allowing you to plan accordingly. Our cross-functional technical accounting experts can provide insight into ASC 606’s implications, streamline data management, enhance data integrity, and use adoption as a transformational opportunity with long-term benefits.
Financial reporting and disclosures
Initiate the preparation of financial statements, adoption-related disclosures, and post-adoption disclosures. With guidance from CFGI’s experts, your company can easily gather and review the quantitative and qualitative information required to comply with the new disclosure requirements.
CFGI’s experts can help you seize the transformative potential of ASC 606. Get in touch today to learn more!
Connect With Our Leaders
Chris Nyers
Partner
(518) 852-3926
cnyers@cfgi.com
Robert Keep
Partner
(617) 938-7850
rkeep@cfgi.com
Chad Mello
Partner
(603) 661-7390
cmello@cfgi.com
Christopher Murphy
Partner
(516) 491-8973
cmurphy@cfgi.com
