The new revenue recognition standard: Are you prepared for … · 2015-06-03 · With the issuance of the new revenue recognition standard, companies are starting to evaluate plans

The new revenue recognition standard: Are you prepared for change?

2014 Revenue Recognition Survey

November 2014

B The New Revenue Recognition Standard

Overview

1

In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued new, converged standards for revenue recognition (the “standard”), applying to all contracts with customers (ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and IFRS 15, Revenue from Contracts with Customers).

Companies generally have two options to adopt the standard: a full retrospective implementation requiring a recast of comparative periods presented back to 2015, or a modified retrospective implementation, which generally requires the adoption of the standard prospectively on the effective date in 2017.

With the issuance of the new revenue recognition standard, companies are starting to evaluate plans to implement the standard by January 2017 for public companies applying U.S. GAAP and January 2018 for non-public companies.1 Nearly all companies will be affected to some extent, either by the significant increase in required disclosures or by potential changes to current industry and accounting practices.

Companies may need to consider the changes to information technology

1 In connection with the issuance of the new revenue standard, the FASB and IASB established a joint working group, the Transition Resource Group (TRG), to seek feedback on potential implementation issues. At its October 31 meeting, the FASB announced it will be performing outreach over the next several months to assess whether a delay in the effective date of the standard is warranted. The FASB plans to reach a final decision about whether to delay the effective date no later than the second quarter of 2015. The IASB did not comment on a potential delay of the standard’s effective date. For more information, visit: http://www.pwc.com/us/en/cfodirect/publications/in-transition

systems, processes, and internal controls that might be needed to capture new data and address changes in financial reporting.

Are companies ready to comply with the new standard? Do they have implementation strategies in place, and have they prepared for the associated costs? To understand the state of implementation efforts, PwC and Financial Executives Research Foundation (FERF) conducted a survey in the summer of 2014. Survey questions focused on areas of the standard that companies believe to be the most challenging and are expected to result in significant financial statement and operational impacts. The survey also explored the broader impacts of the standard on multiple functional areas, expected transition approaches, and the ability to meet the adoption deadline.

“The revenue recognition standard will eliminate a major source of inconsistency in GAAP, which currently consists of numerous disparate, industry-specific pieces of revenue recognition guidance.” — Russell Golden, FASB chairman, May 28, 20142

2 www.journalofaccountancy.com/News/201410215

2 The New Revenue Recognition Standard

Survey demographics

3

A total of 174 respondents completed the survey. Of these, 63% represent public companies and 37% represent private companies. 91% are U.S. Generally Accepted Accounting Principles (GAAP) reporting companies and 9% represent International Financial Reporting Standards (IFRS) reporting companies. Respondents are from companies of all sizes based on annual revenue, from less than $100 million to more than $10 billion. Respondents also represent a variety of industries, including consumer industrial products and services

(CIPS); technology, information, communications, and entertainment (TICE); financial services; and health industries.

Results from the PwC-FERF survey indicate that while most companies are familiar with the standard3, they have

3 Update no. 2014-09—Revenue from contracts with customers (topic 606) section a—summary and amendments that create revenue from contracts with customers (topic 606) and other assets and deferred costs—contracts with customers (subtopic 340-40)

0

10

20

30

40

50

No responseMore than

$10 billion

$5 billion to

$9.99 billion

$2 billion to

$4.99 billion

$1 billion to

$1.99 billion

$500 million to

$999 million

$100 million to

$499 million

Less than

$100 million

7

40

13

2218

1416

44

CIPS

TICE

Financial Services

Health Industries

No response

42%

26%

15%

9%

8%

Respondents by annual revenue (N=174)

Respondents by broad industry (N=174)

not fully assessed how implementation will impact existing revenue policies, processes, systems, reporting, and commercial operations, as well as the costs to implement these changes.

“Our attention now turns to ensuring a successful transition to these new requirements.” — Hans Hoogervorst, IASB Chairman, May 28, 2014 4

4 www.journalofaccountancy.com/News/201410215


Key findings from the survey

5

In analyzing the responses, a number of overall findings became clear.

Overall, companies are familiar with the standard but they have not fully assessed the potential impacts. Respondents predict that the areas of highest impact will be judgments and disclosures, as well as related system and process changes. They also intend to place significant effort on contract reviews and evaluation of systems modifications.

While most do not foresee changes to business models, many believe that impacts to non-revenue arrangements such as compensation may be pervasive. When it comes to material financial statement impacts, companies were fairly evenly split. Respondents from the TICE industries generally expect more material impacts relative to the other industries. The method of adoption is still being evaluated, but just over one-half of respondents (of those that answered the question) believe that sufficent time has been provided to adopt the standard using the full retrospective method.

Following are key takeaways from the survey:

• Most are familiar with the standard5—A majority of respondents (54%) said they are familiar or very familiar with the standard. Those in the finance function of companies seemed to have the greatest level of knowledge. The responses, however,

5 For an overview of the standard, visit www.pwc.com/us/revrec

suggest that several other functional areas will be impacted and involved in the implementation process.

• Areas of highest impact relate to increased judgments and disclosures—Provisions of the standard that are expected to be complex and judgmental—and result in the largest financial reporting and operational impacts—are fairly consistent. They include applying the variable consideration constraint, determining distinct performance obligations, evaluating contract modifications, and estimating standalone selling prices of performance obligations. Responses indicate that companies anticipate difficulty in dealing with areas of revenue recognition in which significant judgment will be required. The most significant increased operational effort will be preparing the required disclosures under the standard.

• Significant level of effort will be required to review contracts—Contracts are sometimes geographically dispersed or only somewhat centralized within companies. Survey respondents expect contract reviews to be critical to the overall implementation effort, with a majority of respondents indicating that they expect these reviews will require moderate to significant effort.

• Considerable systems changes are anticipated—Systems are typically not centralized in one

location, although they are not as geographically dispersed as company contracts. Many companies also have a number of “feeder” systems involved in the overall revenue cycle. Almost 60% of respondents said they believe adoption of the standard will require a parallel reporting system. Seventy-seven percent of respondents said that they expect to make some to significant changes to systems, while 23% expect to make no changes. The majority of respondents indicated that the time required to implement system changes will be six months to two years.

• Changes are expected to internal controls and other arrangements, but limited impact to business models—A majority of respondents indicated that at least some changes to their company’s internal controls would be necessary. Few, however, believe that the standard will require changes in business models. Companies expect the standard will affect other non-revenue arrangements, such as compensation, and the majority of respondents were unsure if they would be able to successfully modify these arrangements to keep their companies in substantially the same economic position. At this point, most companies have not yet determined the cost to implement the standard.


• No consensus on the method of adoption and timeline—Respondents were fairly split in their responses related to method of adoption plan: 12% expect to use the full retrospective method (with or without practical expedients) and 12% expect to employ the modified retrospective approach. The rest were unsure or did not answer the question. While 28% of respondents said they would be more likely to use the full retrospective method, if given another year to comply, only 18% were willing to give up the modified retrospective method in exchange for an additional year to adopt the standard.

Respondents also showed no firm consensus on whether they could meet the 2017 deadline to implement the standard using the full retrospective method. Slightly more (29%) said they would be able to meet the deadline than those that indicated they could not (25%).

We hope you find this 2014 revenue recognition survey informative and helpful. PwC and FERF may be conducting a follow-up survey on the standard next summer to analyze how companies’ responses evolve as they evaluate the effects of the standard and prepare for adoption.

7

General familiarity with the standard

We asked survey participants to describe their familiarity with the standard, both overall and by function within the company. A majority (54%) of respondents indicated they were

somewhat or very familiar with the standard, and those in the finance group seemed to have the greatest level of knowledge. Respondents representing all other functions have not considered the standard or only somewhat considered it.

Somewhat familiar

Very familiar

Not familiar

Familiar

No response

17%

8%

30%

37%

8%

0

10

20

30

40

50

60

70

80

Board of Directors

Audit Committee

Sr. ExecutivesOperationsInfo TechTaxFinance

It has been significantly considered

It has been moderately considered

It has been somewhat considered

It has not been considered yet

Overall ASU 2014-09 familiarity (N=174)

ASU 2014-09 familiarity by functional team


Anticipated impactsWe asked survey respondents to identify specific areas within the standard that are expected to result in the following impacts:

• Technical accounting challenges and significant judgments;

• Largest financial reporting impacts; and

• Largest operational efforts

Interestingly, there was significant overlap between the accounting and financial reporting concerns and anticipated operational changes.

Five areas are expected to be the most challenging/judgmental to determine the appropriate accounting from a technical accounting perspective. These are:

1. Applying the variable consideration constraint: While estimating variable consideration may better represent the economics of a company’s transactions, estimating the amount of consideration a company expects to be entitled to (subject to being probable (U.S. GAAP) or highly probable (IFRS) of no significant revenue reversals, e.g., “the constraint”) will require substantial judgment. If the full amount of variable consideration does not meet the constraint to be recognized as revenue, companies believe that estimating some minimum amount that does meet the constraint will

be very challenging. Companies recognize revenue earlier under the standard by building in variable consideration estimates at inception of contracts, which is a change from current guidance.

2. Determining the impact of contract modifications: While the standard now provides more explicit guidance in contract modifications, it is expected to be a judgmental and challenging area. Contract modifications will require a contract-by-contract decision on whether a modification results in a separate contract, a termination of the old contract and creation of a new one, or remains the same contract.

3. Determining whether goods and/or services are “distinct” in multiple deliverable agreements: Using the criteria and indicators in the standard to determine whether goods and/or services are distinct in multiple deliverable agreements is also expected to be a challenge.

4. Estimating the standalone selling price of performance obligations: Some companies will have to perform new estimates for standalone selling prices of items, which are expected to require new processes and controls to ensure documentation and consistent application.

5. Determining the impact of the collectibility threshold: Respondents rank collectibility, for which the standard provides a lower threshold, as among the most challenging technical impacts. Companies for which collectibility is not probable will not be able to default to a cash basis to recognize revenue, and the cancellation of the contract may be the trigger to recognize revenue for amounts received. In these cases, it may be very judgmental to determine when a contract has been canceled.

9

Areas of the standard that respondents expect to be the most challenging/judgmental

from a technical accounting perspective (N=174)

0 10 20 30 40 50

“5” Rankings“4” Rankings“3” Rankings“2” Rankings“1” Rankings

Determining whether the bill-and-hold criteria are met

Determining the accounting for arrangements with repurchase agreements

Determining whether variable consideration is subject to the sales/usage based royalty exception

Determining whether the entity is acting as a principal or an agent

Determining whether a license of intellectual property is “dynamic” or “static”

Determining the best measure of progress for satisfying performance obligations and when adjustments may need to be made

Applying the cost capitalization guidance in the standard

Determining whether (or when) the parties are committed to perform their obligations under the contract

Determining whether a significant financing component exists

Determining whether a contract with a customer provides the customer a material right

Determining whether a performance obligation is satisfied at a point in time or over time

Determining what is in scope of the standard, including identifying which party is the customer

Determining the allocation of the transaction price to separate performance obligations

Determining the impact of the “collectibility threshold”

Estimating the standalone selling price of performance obligations

Determining the impact of contract modifications and/or whether contracts should be combined

Determining whether items are “distinct” in multiple component arrangements

Applying the variable consideration constraint

“1” Rankings Most Challenging; “5” Rankings Least Challenging


The following five areas are expected to result in the largest financial reporting impact:

1. Separation of “distinct” performance obligations: Companies may have greater or fewer performance obligations than deliverables under the current guidance, and separating distinct performance obligations is expected to have a significant impact.

2. Collectibility: The model for collectibility changed throughout re-deliberations of the standard and was one of the final decisions reached by the FASB and IASB. As a result, companies may not fully understand the new requirements. Alternatively, respondents may understand that in instances in which collectibility is not probable, companies cannot simply default to cash-basis accounting. This may result in a substantial impact for some companies.

3. Variable consideration: Variable consideration may have a substantial impact due to accelerated timing of revenue recognition, since revenue recognition will not automatically be delayed when amounts entitled to are not fixed or determinable, or when the amounts are contingent.

4. Timing of revenue recognition: Significant changes in the timing of recognition (e.g., at a point in time or over time) may result for some companies as they evaluate the standard’s criteria for recognizing revenue over time before they can use a point in time.

5. Scope: The scope, including transfers of assets that are not an output of a company’s ordinary activities, will be an important area to evaluate and may result in significant financial reporting changes. This will be particularly challenging if agreements contain revenue and non-revenue performance obligations.

Most companies have not yet quantified the financial statement impact of the standard. In fact, only 10% of respondents said they have attempted to quantify the financial statement impact. More than one-third (35%) said they have not done so, while 55% were either unsure or did not answer the question.

11

0 5 10 15 20 25 30 35 40

“3” Rankings“2” Rankings“1” Rankings

Accounting for repurchase agreements

Sales- and usage-based exception for licenses of intellectual property

Parties must be committed to perform their respective obligations under the contract

Contract cost guidance

Bill-and-hold arrangements

Measuring progress toward satisfying performance obligations

Time value of money

Principal versus agent

Options to acquire additional goods or services


Contract modifications and/or combinations

Accounting for licenses’ recognition

Removal of the current contingent revenue rules

Allocating the transaction price to separate performance obligations

Timing of revenue recognition

Scope, including transfers of assets that are not an output of an entity’s ordinary activities

Collectibility

Variable consideration

Separating “distinct” performance obligations

Areas of the standard that respondents expect to result in the largest financial reporting impact (N=174)

“1” represents the greatest impact, “2” represents moderate impact, and “3” represents minimal impact


When it comes to material impact to the income statement and/or balance sheet, 53% said they do not expect material impact, while 47% said they do (of those that responded to the question).

The percentage of respondents who expect a material impact compared to those who do not was fairly consistent across sectors, except for the TICE industries which are more likely to be impacted.

No

Not sure

Yes

No response

13%

35%

42%

10%

No

Not sure

Yes

No response

23%

19%

41%

17%

Attempted to quantify the financial statement impact (N=174)

Expect material impact to income statement and/or balance sheet (N=174)

0

10

20

30

40%

Health IndustriesFinancial ServicesCIPSTICE

No material impact expectedMaterial impact expected

7%8%11%

35%

13%

31%

25%

11%

Expect material impact to income statement and/or balance sheet (by industry)

13

Five areas are expected to result in the largest increase in operational effort. These are:

1. Disclosure requirements: The standard requires substantial disclosures around revenue, requiring the preparation of computations and data, particularly for companies with long-term contracts. As a result, companies will need to evaluate how to best capture and track data to meet these new requirements.

2. Separating “distinct” performance obligations: Given that some companies may have more performance obligations when compared with current units of accounting, separation of distinct performance obligations may be operationally challenging. This may be particularly difficult with allocation of consideration across increased performance obligations.

3. Variable consideration: Some companies may find it a significant challenge to estimate variable consideration, evaluate the constraint on revenue recognition, and update estimates.

4. Collectibility: Companies can no longer simply default to the cash basis when collectibility is not probable at the inception of an agreement. For situations in which collectibility is not probable, it may be an operational challenge to identify the trigger to recognize any cash received (since the receipt of cash is no longer the automatic trigger to recognize the revenue).

5. Contract modifications: Companies may find it difficult to identify modifications, determine which model for modifications within the standard applies, and then accurately capture the information to report the financial impact.

The New Revenue Recognition Standard14

Significantly more disclosures predicted

When asked more detail about whether respondents expect more disclosures

related to revenue as a result of the standard, a majority said they predict significant additional disclosures, and more often at the entity level than the segment level.

0 5 10 15 20 25 30 35

“3” Rankings“2” Rankings“1” Rankings

Options to acquire additional goods or services

Accounting for repurchase agreements

Bill-and-hold arrangements

Sales- and usage-based exception for licenses of intellectual property

Accounting for licenses’ recognition

Allocating the transaction price to separate performance obligations

Principal versus agent

Removal of the current contingent revenue rules

Time value of money

Contract cost guidance

Parties must be committed to perform their respective obligations under the contract

Measuring progress toward satisfying performance obligations

Inventorying agreements

Timing of revenue recognition


Contract modifications and/or combinations

Scope, including transfers of assets that are not an output of an entity’s ordinary activities

Collectibility

Separating “distinct” performance obligations

Variable consideration

Disclosure requirements

Areas of the standard that respondents expect to result in the largest increase in level of effort operationally (N=174)

“1” represents the greatest increase in level of effort, “2” represents moderate increase in level of effort, and “3” represents minimal increase in level of effort

15

Contracts–Landscape and level of effort to review When asked whether companies’ contracts with customers are centrally located or geographically dispersed, 37% of respondents said contracts are geographically dispersed, 16% indicated that they are somewhat centralized in very few locations, and 23% said they are centralized in one location.

0

10

20

30

40

50

35

29

23

1720

66

44

No responseNoNot sureMore at a segment level

More at an entity level

Significantly more at a

segment level

Significantly more at an entity level

Centralized in one location

Don’t know

Geographically dispersed

Somewhat centralized in very few locations

No response

23%

2%

37%

16%

22%

Do you expect more disclosure related to revenue as a result of the standard? (N = 174)

Centralization of contracts (N=174)

Almost half (49%) of respondents said they expect to expend significant effort on contract reviews, 26% predict moderate effort will be required, 18% expect to expend some effort. Only 7% said contract reviews would require little to no effort (percentages were calculated excluding those that were unsure or did not answer the question). The general consensus appears to be that at least moderate effort will be needed to perform contract reviews. Depending on the geographic


dispersion of those contracts and the accessibility, it may be difficult for some to even locate the contracts. Further, more dispersed contracts may make it more challenging to coordinate efforts around the globe and reach consistent decisions.

Systems: Landscape and extent of changesSystems involved in the revenue cycle tend to be more frequently centralized in one location as compared with contracts. In fact, 30% of respondents said their systems are centralized in one location, and 21% said systems are somewhat centralized in very few locations. One in four respondents said their systems are decentralized.

0

10

20

30

40

50

60

70

80

No responseDon’t knowLittle to no effort

Some effortModerate effortSignificant effort

38

119

22

33

61

Level of effort on contract reviews (N=174)

17

Respondents said that feeder systems frequently involved in the revenue cycle will also be impacted. Of those respondents who noted one or more feeder systems would be impacted (e.g., excluding those that are unsure or did not answer the question), 48% said that only one to three feeder systems would be affected, and 29% noted that 10 or more feeder systems would be impacted. As companies continue to work toward implementation and get the IT function more involved, it will be interesting to see whether these numbers increase over time.

When asked whether they expect to make changes to IT or enterprise resource planning (ERP) systems as a part of implementation, most (77%) said they expect to make some to significant changes, while 23% said they anticipate no changes (percentages were calculated excluding those that were unsure or did not answer the question).

Decentralized

Don’t know

Somewhat centralized in very few locations

Centralized in one location

No response

25%

2%

21%

22%

30%

0

10

20

30

40

5044

21

16

2

8

4646

37

No responseNot sure30+20–2910–194–91–3

Centralization of accounting systems (N=174)

Number of feeder systems impacted (N=174)


Since companies will be required to report results under both the old and the new revenue recognition guidance for at least one year, survey respondents were also asked whether adoption of the standard will require some form of parallel reporting system. Fifty-nine percent of respondents said that they expect they will, while 41% do not believe parallel reporting will be necessary. Responses from the more highly affected TICE industries were higher with 75% indicating that a parallel reporting system would be needed.

And of those respondents who expect they will need a parallel reporting system (e.g., excluding those that are unsure, those that do not expect to need a parallel reporting system, and those that did not answer the question), 84% said that they believe implementing the system will take at least six months; many expected implementation will take more than one year. For companies that need parallel reporting and are considering the full retrospective option (which would require calendar-year public companies to start capturing the information on January 1, 2015), implementation will be a significant challenge. Even among companies that expect to use the modified

0

10

20

30

40

50

No responseNot sureNoneSome changes

Moderate changes

Significant changes

38

46

2124

28

17

Extent of IT changes (N=174)

19

retrospective option, the 2017 deadline does not leave much time to determine system requirements, configure the changes, evaluate options and vendors, and implement any new system.

0

10

20

30

40

50

No response

Not applicable–we do notexpect to

Notsure

2–3years

1–2years

6–12months

4–6months

1–3months

37

25

48

5

29

20

73

No

Not sure

Yes

No response

18%

34%26%

22%

Length of time to implement (N=174)

The need for a parallel reporting system (N=174)

Other anticipated changes and the broader cost pictureCompanies were asked to predict how the standard would affect broader areas such as their business models, go-to-market strategies, internal controls, and non-revenue arrangements. Most were not certain, so it’s not surprising that respondents also said they are unsure about the cost implications of compliance with the standard.


When asked about the potential need to implement process changes due to the standard and the subsequent impact on internal controls, 87% of those who expected modifications noted that they anticipate at least some change in their company’s internal controls.

More than half (55%) of respondents said they do not expect to make significant changes to business models and/or how their company goes to market with customers. Only 14% expect moderate to significant changes (percentages are based on those respondents who selected an expected level of anticipated changes). Not surprisingly, most of the 14% who said that they expect to make moderate to

0

10

20

30

40

50

37

22

15

31

42

27

No responseNot sureNoSome changes expected

Moderate changes expected

Significantchangesexpected

0

10

20

30

40

50

60

3833

57

32

86

No responseNot sureNochanges

expected

Some changes expected

Moderate changes expected

Significantchangesexpected

Expected change in internal controls (N=174)

Anticipated changes to business model (N = 174)

21

significant changes to their business models are from the TICE industries, which are generally more affected by the standard as compared to other industries.

Many respondents predict the standard will affect other non-revenue arrangements. These could include compensation arrangements, debt agreements, shareholder/venture agreements for investments held (e.g., dividends entitled to or impacts pricing in put or call formulas), and or vendor/license agreements (e.g., company is entitled to royalties based on a percentage of revenue). Forty-nine percent of respondents said that they expect compensation arrangements to be affected, while 34% said they do not expect impacts to other arrangements (percentages were calculated excluding those that are unsure or did not answer the question). Again, there was a great deal of uncertainty: 40% of respondents indicated they are unsure whether other arrangements would be affected (this percentage was calculated excluding only those who did not answer the question).

Respondents are even more uncertain whether they would be able to amend these arrangements to keep their company in substantially the same economic position. While 28% said they would be able to do so, only 4% responded that they would not, and 68% were not sure. (These percentages were calculated excluding those that do not expect the standard to have an impact on other arrangements and those that did not answer the question.)

Estimated costs and timeline to implement the standard

It is clear that respondents do not yet have a budget for the estimated internal and external costs to implement the standard. This is not surprising, as businesses are continuing to evaluate the impact of the standard and the deadline for implementation is more than two years away. Almost two-thirds (64%) noted they are not sure or are still evaluating, and only 13% had estimated an approximate budget; 23% skipped this question. Clearly, companies are unsure of how significantly the standard will impact their companies, including all the various functional areas that will be involved in the broader implementation efforts.

The effective date of the standard is January 2017 (excluding U.S. GAAP non-public companies, which have until 2018), and a significant number of respondents said that deadline does not provide adequate time to adopt the standard using the full retrospective method. One in four respondents said the timeframe is too short, while an equal number said they were not sure. Twenty-nine percent of respondents, however, said the timeline is adequate. Twenty-one percent did not answer the question.


We were curious if companies expect to adopt the standard using the full retrospective method or the modified retrospective method. The results were fairly split, with 12% of respondents choosing each of the methods, when combining full retrospective with and without use of practical expedient(s). Given that it is still fairly early in the implementation process and there are many factors to consider when choosing the adoption method, it was not surprising that 56% of respondents were not sure, and that 20% skipped the question.

To understand why many consider the timeframe too short, we looked at the write-in responses to the deadline question. Of the 26 respondents who entered a response, only three represented companies with revenues of less than $1 billion, perhaps suggesting that the effort required to fully implement the standard is a greater challenge to larger companies than to smaller ones. Most write-in responses indicated that, in order to use the full retrospective method, the standard would need to be broadly understood throughout their companies and that the processes, systems, and controls must be in place by 2015 to ensure that financial reporting is accurate. These respondents generally feel that the deadline to achieve these steps approximately seven months after issuance of the standard is too short.

Yes

No

Not sure

No response

29%

25%26%

21%

Does the effective date provide sufficient time to adopt using

the full retrospective method? (N = 174)

23

Based on the responses, some industries are more likely to opt for full retrospective while others are more likely to favor modified retrospective, as described above. Since the potential impact of the standard varies by industry, those likely to be more significantly affected may be leaning more toward modified retrospective, perhaps because they may not have time to adopt the standard using the full retrospective method.

Retrospective (full)

Retrospective (full) with practical expedient(s)

No response

Modified retrospective

Not sure

6%6%

20%

12%

56%

Planned implementation (by industry)

Planned implementation (N = 174)

Survey results show that more respondents would use the full retrospective method if they were allowed an extra year to adopt the standard. Twenty-eight percent of respondents said they are more likely to opt for the full retrospective method, while 15% said they would not. However, when asked if companies were willing to give up the modified retrospective option in exchange for an extra year to adopt the standard, only 18% of respondents said yes and 27% indicated no. As

with many other issues, numerous respondents were unsure or skipped the question, possibly indicating that they are in the earlier stages of their evaluation process.


No

Not sure

Yes

No response

15%

36%

28%

21%

No

Not sure

Yes

No response

27%

34%

18%

21%

More likely to adopt using full retrospective, if provided one extra year (N = 174)

Willing to give up modified for mandatory full, if provided one extra year (N = 174)

25

About PwC

PwC US helps organizations and individuals create the value they’re looking for. We’re a member of the PwC network of firms, which has firms in 157 countries with more than 195,000 people. We’re committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

About Financial Executives Research Foundation (FERF)

Financial Executives Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non-members alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals. Questions about FERF can be directed to [email protected].

www.pwc.com/us/revrec

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers, its members, employees, and agents do not accept or assume any liability, responsibility, or duty of care for any consequences of anyone acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2014 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

The views set forth in this publication are those of the authors and do not necessarily represent those of the FERF Board as a whole, individual trustees, employees, or the members of the Advisory Committee. FERF shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives. FERF publications can be ordered by logging onto http://www.ferf.org.

Copyright © 2014 by Financial Executives Research Foundation, Inc.

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MW-15-0778 AW

To discuss the survey results in more detail, please contact any of the following PwC authors:

James Kaiser Partner, IFRS and U.S. GAAP Change Leader PricewaterhouseCoopers (267) 330-2045 [email protected]

Farhad Zaman Partner, Deals (646) 471-5376 [email protected]

Chad Kokenge Partner, Deals, Accounting Advisory Services Leader (646) 471-4684 [email protected]

Brian Wiegmann Director, Deals (305) 375-7328 [email protected]

Documents

The new revenue recognition standard: Are you prepared for … · 2015-06-03 · With the issuance of the new revenue recognition standard, companies are starting to evaluate plans