Editor’s note: Today’s post is the latest from our guest columnist, Shauna Watson, Global Managing Director of Finance & Accounting for RGP, a strategic partner of Leeyo Software in helping clients implement ASU2014-09. Shauna, a subject matter expert in U.S. GAAP, IFRS, SEC and PCAOB regulations, will share her valued opinion on a number of topics in this space. Here, she discusses the unexpected surprises – and long-range gains – that may arise from implementing a new revenue solution, such as RevPro.
In our dealings with companies, we’ve come across a few common surprises among those that begin an implementation of a new system for processing revenue, which include:
1) A sometimes overwhelming amount of work to be done even when little to no impact is expected
2) Errors in their current accounting that need to be evaluated for materiality
3) Issues with data quality and availability
One of the first steps a company should take is to identify their revenue streams and contract population. Reconciling their contracts back to the revenue in their financial statements can help determine that the population is complete, but this is surprisingly difficult to do for many companies. An automated tool could give companies the comfort they need to know that they aren’t missing a large portion of their contracts.
Some companies are opting to improve their controls and setting up processes to ensure new products/services offered to customers and non-standard terms are properly documented and identified.
The best advice we can offer anyone willing to listen when it comes to data quality – and the necessary work involved in lifting that data up to a ‘quality’ standard – is that there may be no getting around the fact a level of effort is involved, but you would be wise to start this endeavor sooner rather than later. Have your data, your processes and contracts in an organized state now so you can be ahead of the game when the new revenue recognition guidance comes down the pike.
Remember, these changes are truly right around the corner!