& Al Duhaime, Audit Principal Jeff Wheeler, Audit

Transcript:& Al Duhaime, Audit Principal Jeff Wheeler, Audit:
& Al Duhaime, Audit Principal Jeff Wheeler, Audit Principal RECENTLY ISSUED AND UPCOMING ACCOUNTING PRONOUNCEMENTS FINANCIAL REPORTING DEVELOPMENTS (Fiscal Year 2019) A Brief Overview of ALAN DUHAIME Audit Principal 603.626.2240 aduhaime@bnncpa.com JEFF WHEELER Audit Principal 603.626.2215 jwheeler@bnncpa.com TODAY’S PRESENTERS TODAY’S OBJECTIVES you with an update on accounting and reporting changes impacting you for 2019, and share best practices to prepare, plan, and implement. a brief overview of new and upcoming accounting and reporting pronouncements that have been issued that will be effective in years subsequent to 2019. a bit about potential accounting and reporting changes that are in discussion phases / comment phase. TODAY’S AGENDA OTHER 2019 CALENDAR YEAR-END UPDATES – NONPUBLIC ENTITIES OTHER 2019 CALENDAR YEAR-END UPDATES – NONPUBLIC ENTITIES STEPS TO TAKE IN THIS CHANGING ENVIRONMENT Identify responsible parties to oversee implementation of these complex pronouncements Set appropriate goals, timetables, accountability, and track progress towards implementation Evaluate IT Systems and resources to ensure they meet the requirements to capture, track, summarize, and report the data needed to account and report under these standards Involve external advisors and professionals early Have good up-front communication with lenders and other users of your financial statements REVENUE FROM CONTRACTS WITH CUSTOMERS (TOPIC 606) Effective for non-public fiscal years beginning after December 15, 2018 (calendar 2019) The core premise is that an entity should recognize the amount of revenue it expects to be entitled to for the transfer of promised goods or services to customers. LESSONS LEARNED FROM PUBLIC COMPANIES REVENUE RECOGNITION - WHAT SHOULD YOU BE DOING NOW Ensure records and files containing customer contracts and specifics on terms of product and service sales are accurate and complete Review standard contracts to fully understand the nuances of your product and service deliverables Consider the impact of other items impacted by the new pronouncement, such as contract acquisition costs, setup costs, fulfillment, and sales commissions Decide on an adoption approach REVENUE RECOGNITION – FROM RULES BASED TO PRINCIPLES BASED Old rules were very specific, and industry focused New rules are principles based, and require more evaluation, judgement, and estimation Examples include contract duration (especially with termination provisions), renewals, variable consideration provisions, and allocation of transaction price to each performance obligation based on stand-alone selling prices STEP ONE: IDENTIFY CONTRACT(S) A contract is defined in ASC 606 as an agreement between two or more parties that creates enforceable rights and obligations Enforceability of rights