SAN JOSE, Calif., Nov. 15, 2016 /PRNewswire/ -- A new survey of top finance executives at U.S.-based companies released today by Intacct, the customer satisfaction leader in cloud ERP software, reveals that finance departments are behind in preparing to transition to new ASC 606 revenue recognition guidelines. Countless headaches lie ahead for companies—from understanding how the new guidelines will impact existing contracts to adjusting the way revenue is recognized when customers renew or upgrade contracts.
The Intacct ASC 606 Readiness Study found that 40 percent of finance professionals say that preparing for and implementing the new accounting standards will be a painful experience. And that pain is palpable enough to executives that 40 percent would rather stand in line at the DMV, 36 percent would rather sit in two hours of traffic, and 30 percent would rather burn the roof of their mouths with pizza than implement these standards. The ASC 606 guidelines issued by the Financial Accounting Standards Board (FASB) will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. Under the new standard, revenue should now be recognized when control of the contracted goods or services are transferred to the customer, and at a level that is commensurate with what has been delivered by that point. According to the American Institute of Certified Public Accountants (AICPA), the new standard has the potential to affect every entity's day-to-day accounting and, possibly, the way business is executed through contracts with customers. The new accounting standard goes into effect starting at the end of 2017, but the influence of the new guidelines will impact companies much earlier, as any customer contract that extends beyond the start date will be affected. Furthermore, impacted companies will need to recast prior-period financial statements using the new guidelines in advance of the start date in order to provide proper comparative and future guidance to investors.