I took an interesting Proformative course given by Jeff Tchir. I'm reading article after article in
The new Revenue Recognition Rules 2014 - who wins?
Answers
Wayne - I am trying to read your post: The new Revenue Recognition Rules - who wins? and can not open it. I selected :Follow This" and it is not in your list of posts.
Wayne - you are referring to the new unified revenue standard - for GAAP and IFRS? They will change the way revenue is recognized in a number of scenarios ...
1
Bob, I'm sure they will. But the litmus test is this: will the investor/creditor understand the change, see the change and benefit from the change?
I have read the drafts of both the GAAP and IFRS versions of the regulations that will converge into the unified set of principles. It appears that those presently following pre-convergence GAAP will have only minor adjustments to their revenue recognition processes, whereas those following pre-convergence IFRS will be dealing with significant changes and a more structured environment.
Who wins?
1. Companies that are required to report under both standards will win because, under the converged standards, they will be working with uniform rules and processes saving time internally and in the external audit.
2. Investors win because they can compare KPIs on a uniform basis.
3. Public accounting firms win because they always do when there is a change in principle. I can't explain why; it's just a rule of nature.
4. Finally, consultants like me win because we will be needed to assess a client's revenue recognition processes and render advice to obtain conformance with the converged standard.
2
I think the new rules as I understand them give accountants more than enough grey area so that I don't believe you'll get a true win to Investors.
But I wholeheartedly agree with your point 3 and 4, while point number has its own merit.
I believe there is some value in #1 and #2. Having seen revenue models for IFRS countries - comparability and consistent methodology across international boundaries should provide some benefit.
At the same time I don't think the impact on GAAP is minor for all US companies. If you have MEA transactions valued under the EITF 08-01 rules where you are making heavy use of
Hello Wayne!
Like Julie I am unable to access the full article. Please help.
I am unsure what "article" you are talking about. The course is available on Proformative (click the link that says "Online
The course name is "Topic 605 – Revenue Recognition from Contracts with Customers: An Introduction to the [proposed] New Standard".
There was no other specific article cited, just a glob of the current literature into a general statement.
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