Challenges Ahead from New Revenue Standard
Sep 20, 2016
On September 20, 2016, the Wall Street Journal released an article where Eric Knachel, senior consultation partner at Deloitte & Touche LLP, and Christian Chiriatti, managing director at Deloitte & Touche LLP, discuss that the effects of implementing the FASB’s new revenue standard will likely reach beyond corporate finance and accounting and will impact the sales, IT, human resources and compliance functions.
In the article, Mr. Knachel observes that “some of the operational aspects of the new revenue standard seem to present the greatest challenge” and that “there is a significant amount of judgment around applying the new standard, and while similar facts should be followed by similar judgments; in practice, organizations may bump up against the notion that facts can be interpreted differently.”
While Mr. Chiriatti suggested that new guidance around contract modifications could affect whether a contract is considered new or modified. He mentions that there is a significant amount of judgment required around assessing the scope and pricing of work being added to a contract, and the resulting decision could impact revenue recognition patterns because new contracts are accounted for differently than modified ones, depending on several other factors.
Review the full article on the Wall Street Journal's website.
