The New Accounting Standard for Revenue Recognition: Do Implementation Issues Differ for Fortune 500 Companies?

Abstract

The purpose of this study is to discover how a sample group of Fortune 500 companies is preparing for adoption of the new revenue recognition standard and how these companies expect it will the impact their current operations. Existing research involved large samples of public and private companies of all sizes. This exploratory investigation seeks to determine if Fortune 500 companies are experiencing different implementation timelines or issues as a result of their size. A survey of chief accounting officers was conducted to discover perceptions of how the new standard will impact various aspects of their respective companies. The study also reports the progress that these companies have made in preparing for and implementing the new revenue recognition standard. Findings indicate that these companies expect to change internal policies and procedures, yet do not anticipate that the new standard will impact product and services offerings. The results of this pilot study, based on a relatively small sample, begin to offer some insight into issues and perceptions of large publicly‐held companies and can serve as a starting point for more extensive research. © 2018 Wiley Periodicals, Inc.

Implementation Critical Success Factors and Accounting Standard Codification Topic 606 Implementation Dynamics: A Correlational Study

“…Despite these warnings, a survey involving CFOs of U.S. technology organizations revealed that 58% had not yet familiarized themselves with the new standards seven months after they were issued (Tysiac & Murphy, 2015). Also, after the first year's deferral, a 2015 PwC survey of 335 respondents found that many organizations do not understand how ASC 606 will affect them, and 38% did not believe ASC 606 will have any significant effect on financial statements (Jonick & Benson, 2018). A December 2015 KPMG poll of nearly 450 financial reporting executives revealed 64% of them were yet to establish a clear ASC 606 implementation plan (Amato, 2015).…”

“…A December 2015 KPMG poll of nearly 450 financial reporting executives revealed 64% of them were yet to establish a clear ASC 606 implementation plan (Amato, 2015). Likewise, in 2016 Deloitte reported many organizations had not commenced a formal assessment process for implementing ASC 606 (Jonick & Benson, 2018).…”

“…Preparing for this innovative revenue recognition standard can be daunting, and instead of focused date deferrals, organizations should take advantage of the additional time to evaluate the potential changes in financial statements, information systems, processes, and controls (Arms & Bercik, 2015;Jonick & Benson, 2018;Knachel, 2016;Tysiac & Murphy, 2015;Yeaton, 2015). According to Thorn and Carson (2017), AICPA's Financial Report Center (FRC) has developed an implementation blueprint for enhancing ASC 606 implementation.…”

“…That collaboration gave birth to ASC Topic 606 and IFRS 15, referred to as Revenue from Contracts with Customers (FASB, 2014). Since the announcement of the first effective date for implementing ASC 606, many studies have investigated the preparedness of organizations across different industries (Jonick & Benson, 2018). Those studies revealed that many organizations are yet to articulate a clear ASC 606 implementation strategy (Amato, 2015;Atwood, 2015;Peters, 2018;Tysiac & Murphy, 2015).…”

Discussion on the Full Implementation of New Revenue Standard in Enterprises

“…Enterprises should always pay attention to the contract when using the new revenue standard to determine the measurement of contract revenue. Enterprises should review the contractual information on the books before recognizing revenue [3] .…”