Determining Performance Obligations When Implementing the New Revenue Recognition Standards May 22, 2019 By: Claudia R. WolterOne of the most challenging parts of the new standards may be determining how many performance obligations you have. Where you previously had more than one “contract” on your job cost schedule, you may now have one. Conversely, you may have previously reported one contract, but under the new standard, it needs to be split into more than one “performance obligation”.What do you need to consider in determining how many performance obligations you have upon implementation of the new standards in 2019? Here are six key questions to ask:Are there contracts with more than one performance obligation?Are there contracts with the same customer that must be combined and accounted for as one performance obligation?Who is reading the contracts and assessing them to determine if there is one or more performance obligations?Who is assigning the values to the separate performance obligations if you determine there is more than one?What changes need to be made in the system to properly account for the performance obligations?Do any changes need to be made in internal controls to properly account for determining performance obligations?Considering these unique factors can help illustrate your company’s implementation preparedness in this area. KatzAbosch has individuals experienced in contractor issues and trained in process improvement using lean six sigma principles that can help you through this transition. If you have any questions about this information please contact your KatzAbosch representative; or contact us by clicking here. Article by: Claudia R. WolterClaudia Wolter, a Shareholder with KatzAbosch, joined the firm in 1988. She has played a major role in leading the firm into the 21st century with cutting edge initiatives, including the transition to and managing of a paperless environment. She serves as Co-Chair of the firm’s Accounting and Auditing Services Group, assists in the quality control management and oversight of the firm and is a member of the Construction and Real Estate Services Group. Most recently, Claudia served as a contributing author of “Construction Accounting,” an in-depth guide to construction financial and accounting issues for attorneys distributed by the American Bar Association. A dedicated professional, Claudia holds the prestigious distinction of Certified Construction Industry Financial Professional (CCIFP), a certification held by less than 50 professionals in Maryland and less than 1000 professionals in the United States, the designation of Certified Construction Auditor (CCA) from the National Association of Construction Auditors (NACA) and a Lean Six Sigma CPA Green Belt certification from Ohio State University ATI and Boomer Consulting, Inc.