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2016 Revenue Recognition Transition Issues – ASC 606 Training

2 2.7k

You can see all upcoming similar training events here – including other Revenue Recognition Accounting Conferences: Upcoming Training Conferences

Discussion Leader Info:

Pavel Katsiak presented Transition Issues: Systems and Processes on June 2, 2016 at the Revenue Recognition Accounting Conference in Philadelphia

. Pavel Katsiak is a Director at PWC and located in Washington DC.

-Pavel has served PwC audit and non audit clients for over 10 years.

-Pavel specializes in helping clients evaluate the accounting and reporting implications of the new revenue recognition standard.

-His combination of audit background and understanding of technical requirements of the new standard brings a practical perspective to the new revenue recognition implementation.

-Pavel’s clients include companies in industrial products, retail and consumer, technology, entertainment and media and services industries.

 

Executive Summary:

Katsiak began his presentation with an explanation that the effects of transition issues extend beyond accounting and continued by discussing an approach to implementation in three phases as listed below.

  • Impact Assessment: Assess impact and determine strategy.
  • Conversion: Establish policy and prepare initial financial results.
  • Embedding: Embed as the primary revenue standard.

The speaker displayed implementation challenges including

  • Centralized or dispersed business units
  • Cross-functional communication and education
  • Diversity of terms and conditions
  • Tax implications

 

The speaker provided data supporting that in the Revenue Recognition Survey of 2015, 30% of respondents said their systems are centralized in one location; 21% said systems are somewhat centralized in a few locations. Of respondents who answered the question, 77% said they expect to make some to significant changes to IT or ERP systems. Furthermore, 84% believe implementing a parallel reporting system will take at least 6 months 59% expect they need a parallel reporting system and 87% of respondents anticipate some change in their internal controls 55% do not expect to make significant changes to their business models.

 

He discussed some changes that would need to be made as a result of the Revenue Recognition System such as

-New data may be needed from:

Ordering systems, Quoting systems, Contracting systems, Billing and invoicing systems, Cash and treasury processes, Licensing operations, and CRM.

 

Katsiak’s presentation displayed a list of expected master and transition data sets that will be impacted by topic 606 such as

  • Volume licensing offer
  • Contract (MPSA, PAR agreement)
  • GL posting for revenue adjustments

 

The speaker spoke on the expected functionality of revenue automation capabilities for Topic 606. The expected functionalities include

  • Analysis of historical sales data to determine SSP (stand alone selling price)
  • Link related transactions into single contract
  • Break out of performance obligations
  • Booking of contract asset
  • Relative allocation method
  • Accounting for contract modifications
  • Ability to “turn off” contingent revenue limitation
  • Dual reporting
  • Reporting based on adjusted revenue

 

Katsiak concluded his presentation with Build vs. Buy considerations of the Revenue System as listed below.

Build

-In house experience on systems, data, revenue

Transactions and expected results

 

-Requires in-house specialized revenue accounting

and technical expertise and skillsets to build a

scalable system and continually update to adapt to

changes in a timely manner

 

-Consider time required to build.

 

Buy

-Solution providers will need to learn client’s systems,

data and requirements, and may not gain full knowledge

 

-Experienced solution providers are subject matter

experts in technical revenue accounting and

related systems. They are expected to continue

investing in their solutions to improve.

 

-Consider availability and long term viability of

vendor solutions and their resources to implement

and support.

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2016 New Lease Accounting Rules – Executive Summary

3 2.9k

From presentation given on Dec 15-16 at Philadelphia Hyatt Bellevue

Financial Accounting & Reporting Update Conference

See similar upcoming CPE Conferences here: 2016 Schedule of CPE Conferences by ACS

By Dave Christensen of RGP:  As a Managing Consultant at RGP, Dave works as a part of RGP’s client service team focusing on the delivery of multiple engagements in support of its advisory services.  He has extensive US GAAP expertise and is currently focused on revenue recognition efforts.  Prior to joining RGP in 2015, Dave spent 9 years with United Services Automobile Association (USAA) as the Assistant Vice President of Accounting Policy and External Reporting, 3 years with GE Insurance as the Lead Technical Accounting Advisor, 5 years at the National Association of Insurance Commissioners as the Statutory Accounting Principles Manager and 6 years as an audit manager at Deloitte & Touche.

FASB Announces new rules: link to FASB website announcement

Dave began the presentation with an executive summary of the long history, impetus and background of the FASB project.

For lessees: most leases will be on the balance sheet

Leases will be classified into two types: Type A- similar to today’s capital leases and Type B- similar to today’s operating leases

Income statement recognition pattern will depend on lease type

Additional disclosures

For Lessors: Type A – similar to today’s sales type of direct financing leases (initial selling profit deferred if lessor does not transfer control) Type B leases similar to today’s operating leases

Leveraged lease model is eliminated

Additional disclosures

David continued with a deeper dive into the scope and definition of leases, lease identification, identified asset, short-term leases, separating lease and non-lease components, contract combinations, portfolio approach, lease terms, lease payments, discount rates, implicit interest examples, economic life, fair value, lease classification, lessee accounting, disclosures and examples.

See similar upcoming CPE Conferences here: 2016 Schedule of CPE Conferences by ACS

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Cybersecurity Update 2016

2 2.6k

See all upcoming live training CPE events here – including SOX training: 2016 Schedule

Presented by: Scott Laliberte is Protiviti’s Managing Director leading the firm’s Vulnerability and Penetration Testing Solution, and is one of three Managing Directors that reviews and approves all of Protiviti’s PCI reports on compliance. Laliberte has been with Protiviti since the start of the firm in 2002 and has more than 20 years of experience in information technology risk and security consulting. He is a published author and accomplished speaker.  He has security expertise in numerous industries including financial services, retail, hospitality,  healthcare, higher education, manufacturing, and consumer packaged goods.

Scott led off the presentation with a discussion of current events including statistics on date breaches.Board Engagement is key:

One in three companies do not have a written information security policy. There are critical gaps in data governance and management, and ones that carry considerable legal implications. On the other hand, organizations with all of these key data policies in place have far more robust IT security environments and capabilities.

Lack high confidence in ability to prevent cyber attack or data breach

Not all data is equal

Many are unprepared for a crisis

Common attacks include:
phishing and spear fishing
harvest credentials
deliver malware
attacks through third parties

they are gathering data for id theft and profit
fraudulent wires
stealing intellectual property
ransom

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SOX Conference 2016: Internal Controls Update

2 2.4k

Fraud Discussion
Presented in Oct 2015 by Pam Verick from Protiviti
SOX & Internal Controls Update Conference – D.C./Tysons Corner
See link here for 2016 SOX Conference details: 2016 SOX Conference in San Francisco June

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Pam opened with a discussion of fraud issues that are trending with boards and management including:
how companies are defending against cyber crime
impact of the fraud principle (COSO 2013)
roles and responsibilities for fraud risk management
reviewing framework for internal investigations
requesting anti-corruption compliance audits

Hot topics affecting fraud risk activities include the Caldwell Memo – outline DOJ expectations for companies trying to get credit for cooperation, Schrems Decision which invalidates US-EU safe harbor, and PCAOB Inspections Briefs and their areas of focus.

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Software As A Service Revenue Recognition 2016

2 2.5k

From Revenue Recognition Conference held in December 2015
Led by Ernst & Young’s Narayanan Balakrishnan, Partner from San Jose, CA
Here is a link to our 2016 events including Software Revenue Recognition Conference: 2016 Events

Narayanan covered five topics in his presentation:
Overview of cloud services
SAAS revenue recognition
ASU 2015-05: Customers accounting for fees paid in a cloud computing arrangement
SEC Hot Buttons
SAAS – under the new rev rec standard

fasb five step

Mr. Balakrishnan explained the difference between accounting for software delivered on premise vs. via the cloud with revenue generally being recognized on a ratable basis for SAAS and upfront for on premise.

On premise software has definitive guidance. SAAS revenue recognition accounting is based on:
SAB 104 – general SEC guidance
ASC 605-25 general guidance on multiple element arrangements
Other interpretive guidance

The presentation went into depth into the practical considerations to determine if the arrangement is software or a service including if the arrangement has a software element, delivered through a third party vendor, does the customer take possession of the software, hosting fees or cancellation penalties relating to contract hosting.

Revenue Recognition can commence when these four elements are satisfied:
evidence of an arrangement
fees are fixed/determinable
collection is reasonable assured
delivery has occurred

The next step is determining whether separate contracts are a single arrangement.

What is the correct accounting for SAAS arrangements wit an obligation to preform implementation services.

What is the appropriate accounting for non-refundable upfront fees and the related initial direct costs.

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2016 ASC 606 Training Conference: Revenue From Contracts With Customers

2 2.7k

Executive summary from Rich Stuart from RSM – Partner National Professional Standard Group

Presentation given at December 2015 Financial Accounting & Reporting Update

Link to upcoming 2016 events including Revenue Recognition Conferences: 2016 List of Events

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In the executive summary, Rich covered the background, effective date and transition points.  He followed with a detailed description of the five steps, other pending guidance and changes and related disclosure issues.

Entities can choose to apply one of two transition methods:

-Full retrospective application of the guidance (pros: provides for best comparability cons: more time consuming particularly when one or comp periods are presented or there is a large number of multiyear contracts)

-Modified retrospective application as of the date of initial application of the new guidance (pros: less time consuming cons: require you to disclose revenue info based on what revenue would have been in year of adoption under legacy rev rec guidance)

fasb five step

Rich explained that there is quite a bit of complexity baked into these steps depending on your particular facts and circumstances.

  1.  Contracts must be enforceable – can also be oral or implied, evaluate collectibility
  2. Identify all the promises to provide/transfer goods or services in the agreement – consider implicit arrangements here too like upgrades
  3. In determining the contract price, considerations include price concessions, discounts, rebates, incentives, bonuses, penalties etc. as well as variable consideration
  4. In allocating the transaction price, you are required to use a relative stand-alone selling price allocation model
  5. In recognizing revenue, you wait until the customer obtains control over the good or service, consider licenses?

 

Other pending changes include gross vs net presentation of sales tax collected from customers, principals vs, agent and various issue by the Transition Resource Group (TRG).

Link to upcoming 2016 events including Revenue Recognition Conferences: 2016 List of Events

 

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Accounting CPE Conferences 2016: CPE for CPAs

2 2.4k

Here is a listing of the 2016 conference schedule through September.

Each conference qualifies for 16 CPEs in all states and will led by experts from the Big 4 and select regional firms:

 

See all 2016 events here: 2016 Schedule

Register by Friday to save $200 off the $995 registration fee for the March events:

 

Schedule of conferences through October:

March 16 & 17 Financial Accounting & Reporting Update in San Jose, CA: Fin Acct Details

March 21 & 22 Revenue Recognition Accounting Update at San Fran. Airport: Rev Rec Details 

May 18 & 19 Software Revenue Recognition in San Jose: Software Details

May 23 & 24 Accounting for Private Companies in Santa Clara, CA: Private Co Details

June 2 & 3 Revenue Recognition Accounting Update in Philadelphia: Philly Rev Details 

June 14 & 15 Financial Accounting & Reporting Update in Boston: Boston Details 

June 20 & 21 Revenue Recognition Accounting Update in San Jose, CA: June Rev Rec Details 

June 23 & 24 SOX & Internal Controls Update Conference at San Francisco Airport: SOX Details

Sept 19 & 20 Life Science Accounting Update in San Jose: Life Sci Details

 

You’ll earn 16 CPEs.  We have a block of discounted rooms available at each hotel.  Space is limited.

Experts from Deloitte, E&Y, PwC, KPMG and Connor Group will lead the discussions and we will typically have 50-75 attendees.  Save an extra $100 if you register three or more people together.

 

 

 

1. Register online using a credit card and the links above

2. Or Register by phone at (610) 789-3110

3. Or Email reply with your contact info to be invoiced
Accounting Conferences andSeminars, LLC is registered with the National Association of State Boards ofAccountancy (NASBA) as a sponsor of continuing professional education on theNational Registry of CPE Sponsors. State boards of accountancy have final authorityon the acceptance of individual courses for CPE credit. Complaints regardingregistered sponsors may be addressed to the National Registry of CPE Sponsors,150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417.
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2016 SOX & Internal Control Training: Recap of Risk Assessment

1 2.3k

From fall 2015 SOX & Internal Controls Conference

Link to agenda and registration info for 2016 event on June 23-24 at San Francisco Marriott Burlingame: 2016 SOX Details

Given by Ernst & Young

There are a combination of drivers leading to the increased focus on risk management.  The regulatory drivers include SEC proposed changes to disclosure and transparency.  The market drivers include lack of transparency over company strategy for stakeholders, recent misstatements in account statements and recent sharp movements in equity values.  The corporate drivers include requirements to meet risk-return trade offs, ability to assign risk appetite to various business units and capital adequacy.

Rick management adds value by enhancing decision quality, efficiently allocating resources and proactively managing volatility.

Some of the common challenges to implementing an adequate risk management program include “turf battles”, lack of common language, achieving buy-in and establishing quantifiable metrics and measurement.

Ernst & Young speakers recommended these initial steps: seek board and management involvement, select a strong leader, establish a management committee/working group, conduct a enterprise risk assessment, develop initial risk reporting, develop next phase of action plans.

sanfrancisco3_grandhyatt

 

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Cybersecurity Update: Executive Summary fro Financial Accounting Update

1 2.3k

From presentation given at December, 2015 Financial Accounting & Reporting Update at Philadelphia Hyatt Bellevue

Link to upcoming events: 2016 Calendar

Presenter: Scott Laliberte is Protiviti’s Managing Director leading the firm’s Vulnerability and Penetration Testing Solution, and is one of three Managing Directors that reviews and approves all of Protiviti’s PCI reports on compliance. Laliberte has been with Protiviti since the start of the firm in 2002 and has more than 20 years of experience in information technology risk and security consulting. He is a published author and accomplished speaker.  He has security expertise in numerous industries including financial services, retail, hospitality,  healthcare, higher education, manufacturing, and consumer packaged goods.

Scott opened up the presentation by referring to recent breach trends and top of mind cyber issues.  The most common recent attack include Phishing and Spear Phishing (directed at higher level for wire transfers), sophisticated malware, attacks directed through third parties etc.

The purpose of these new attacks are multifaceted to gather data for identity theft, fraudulent wires, stealing intellectual property and ransom.  Some of the future issues – as a result of interconnectivity – may include planes, trains and automobiles and other infrastructure.

The industry sectors impacted by these attacks in order by percentage: healthcare, retail, education, government, financial, software, hospitality, insurance, transportation and arts/media.

Some of the key findings from the Protiviti IT Security and Privacy Survey according to Scott:

Board Engagement is key: Organizations with a high level of board engagement in these risks have significantly stronger IT security profiles.

Lack of key “core’ information security policies: One in three companies do not have a written information security policy (WISP). More than 40 percent lack a data encryption policy. One in four do not have acceptable use or record retention/destruction policies. 

Lack high confidence in ability to prevent cyber attack or data breach: Lower confidence levels among IT executives and professionals in preventing an attack or breach likely speak to the creativity of cyberattackers and, in many respects, the inevitability of a breach – and the need for strong incident response planning and execution.

Not all data is equal: The percentage of organizations that retain all data and records without a defined destruction date has more than doubled – not necessarily a positive development. 

Many are unprepared for a crisis: There is a significant year-over-year jump in the number of organizations without a formal and documented crisis response plan to execute in the event of a data breach or cyberattack.  

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Link to upcoming events: 2016 Calendar

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SEC Reporting Update 2016: Executive Summary

1 2.3k

From Dec 2015 presentation at Financial Accounting & Reporting Update

Venue: Philadelphia Hyatt Bellevue

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Link to upcoming 2016 conferences where this topic will also be covered: 2016 Events

Speaker: Pat Woodbury is a Managing Director at FTI Consulting and is based in Washington, DC. Ms. Woodbury has more than 30 years of experience gained through consulting and at the Public Company Accounting Oversight Board (PCAOB), the U.S. Securities and Exchange Commission (SEC), in corporate financial management and public accounting. She provides expert, advisory consulting and investigative services related to technical accounting, auditing, financial reporting, professional responsibility, FCPA and other SEC related issues.

Pat led off the session with a discussion of the SEC organizational structure and a discussion of the renewed focus on financial reporting fraud.  SEC Disclosure Effectiveness Initiative was created with the intent to update and modernize specific disclosure requirements, eliminate duplication, provide only material information.

Pat summarized the efforts of the SEC Enforcement Division including their aggressive firsts:

admission by an auditing firm

action against a Big 3 credit rating agency

first high frequency trading manipulation action

Enforcement’s priorities for the next year include a focus on complex financial products, gatekeepers, financial reporting and accounting fraud.

Pat went on to explain how the Enforcement Division will utilize technology (and data analytics) to better understand and root out fraud.

Pat’s summary of recent financial restatements included the following data:

The most recent restatement undermined reliance on previously-filed financial statements (i.e., an 8-K Item 4.02 was issued). Only about 30% of recent restatements fall into that category

The restatement affected three years of financial data. Companies on average had to go back only 1.5 years to correct financial statements

It typically takes companies on average only about a week to file restated financial statements.

Companies on average lose more than a quarter of their market value following a material financial restatement

Pat covered the evolution of Dodd-Frank.  The Commission has now proposed or adopted over 90% of the rule-making.  The final rules to be written are on a regulatory framework for over-the-counter derivatives and disclosures around executive compensation.

Link to upcoming 2016 conferences where this topic will also be covered: 2016 Events

 

 

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