Findings from Latest ASC 606 Disclosures Study by Connor Group

By Aarthi Rayapura June 1, 2017

Editor’s note: Today’s post is from guest columnist, Aleks Zabreyko, Partner, Head of Professional Practice at Connor Group. Here, Aleks offers his views on the firm’s most recent ASC 606 Disclosure Study.

Connor Group has recently released the 3rd edition of its ASC 606 Disclosure Study. The study is based on periodic reports filed by over 300 companies with a market capitalization of at least $10 billion between November 11, 2016 and March 1, 2017.

Three distinct trends are evident:

  • Companies provided substantially more extensive and detailed disclosures than in their prior filings, when compared to the previous study released in November 2016.
  • Very few companies chose to adopt ASC 606 early. Just four companies surveyed transitioned to ASC 606 in January 2017: Alphabet, Ford, General Dynamics and Raytheon.
  • The modified retrospective method proves to be by far the more popular to date, with almost three times as many companies using it than the full retrospective method.

In recent financial statement disclosures, 50% of the companies surveyed indicated they could not yet describe how ASC 606 will impact their financial statements as they had not completed their assessment. However, this is substantially less than the 87% of the same companies as highlighted in our 2016 study. Notwithstanding the progress, many of the companies able to describe the adoption impact were those which concluded minimal material impact from ASC 606. Included in this category were names such as: ABB, IBM, Oracle, Time Warner, Pfizer, Johnson & Johnson, Eli Lilly and others.

Most companies chose not to adopt ASC 606 early. Only six companies among those surveyed (the four listed above, along with Analog Devices and Microsoft) either adopted or plan to adopt ASC 606 early.

About 60% of companies, compared to over 90% in our November 2016 study, did not indicate whether they will use the full retrospective or modified retrospective method for transition. Among the remaining companies, the number using the modified retrospective method (93) exceeded those using the full retrospective method (34) by a factor of almost 3:1.

The study also includes example SAB 74 disclosures with varying extent of qualitative and quantitative information provided. The featured disclosures include Ford, Microsoft, T-Mobile, GE, Amazon, IBM, American Airlines and several others.

For more detailed information, download the full study here: ASC 606 (IFRS 15) Disclosure Study March 2017 v6

About Connor Group (www.connorgp.com). Connor Group is a specialized professional services firm of Big 4 alumni and industry executives. We have been deeply involved with ASC 606 for many years, starting with contributing to the drafting process for this new standard through comment letters. Through our deep understanding of the new standard’s provisions and the underlying principles and our trademark practical hands-on approach, we have been leading our clients, who are among the world’s top growth companies, through the implementation and influencing industry-wide accounting practices.