Here at Intacct, we have been closely following the release of the new converged revenue recognition standard—not only because our software solution helps companies address the complexities of revenue management, but also because as a software company, the new standard will have a pervasive impact on our accounting and business processes.
In this two-part blog series, I will provide a short introduction to the standard and offer some helpful resources that will get you started on the journey towards full adoption. In addition, we will look at some specific examples from the latest industry guidance on how the new standard will impact software companies in particular.
For years, accounting for revenue recognition has been regulated by a plethora of industry specific guidance issued by the Financial Accounting Standards Board and supplemented by quasi-GAAP guidance from the SEC, American Institute of Certified Public Accountants (AICPA), and accounting firms. With the issuance of the converged standard, all the transaction and industry specific guidance for the software industry is going away and will be replaced by a single five step principle-based approach.
The best short introduction of this new approach that I have seen comes from Deloitte as part of their Heads Up series. If you are looking for something more comprehensive, PWC has published a full guide to the codification on its CFOdirect Network portal. Additionally, our friends at the AICPA have issued a great Learning and Implementation Plan that provides a step-by-step guide on how to get your company started with the implementation process of the new standard. Because of the pervasive impact on processes and systems driven by the new standard, the AICPA recommends that firms assess their IT systems in 2014 in order to evaluate whether these can capture the required level of information required by the standard.
In the second part of this series, I will go over some specific technology industry use cases, including how to account for post-contract support (PCS) under the new standard. To learn more about Intacct’s revenue management software, please visit http://www.intacct.com/revenue-management-software.