The clock is ticking, and research shows that most companies aren’t on target to effectively implement the new Revenue Recognition Standard, which was jointly issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Scheduled to go into effect January 1, 2018, the new standard will affect companies across various functional areas including accounting, investor relations, legal, sales, information technology, human resources, and many more.
Just one year from when the new standard takes effect (January 2018), only 17% of public companies had begun their implementation phase.
In our 100th episode of Inside America’s Boardroom, Cindy Fornelli, Executive Director of the Center for Audit Quality (CAQ), joins host TK Kerstetter to discuss how boards—and particularly audit committees—can be successful in their oversight and financial reporting responsibilities. Implementing a process as vast as the new revenue recognition standard will take a significant amount of time and resources, which is why the CAQ developed a tool to help companies implement the standard.
A Tool for Audit Committees
While the January 2018 effective date may seem far away, most companies will need to evaluate 2016 and 2017 financial information under the new rules—which is why it’s critical for audit committees to understand how management is assessing the impact of the new standard. Preparing for the New Revenue Recognition Standard: A Tool for Audit Committees was designed to help audit committees think about their interactions with external auditors as the company goes about the implementation.
The tool helps boards answer important questions, such as: What does the new standard mean? Is the company on track to manage these changes? How is the company preparing investors to understand the impact?
From a high level, this episode outlines first steps for boards that are beginning to assess implementation of the new standard. Click here to download the CAQ’s comprehensive tool. And remember that time is of the essence!
The filming of this episode of Inside America’s Boardrooms was made possible by our Knowledge Partners.