How To Implement Disclosure Information Under the New Revenue Recognition Standards

There are a lot of new disclosures required.  Some are policy and can be written/determined at any time during 2019.  Others are more pervasive and you may need to make system changes now in order to capture the information needed for your 2019 financial statements. 

GAAP now requires a footnote disaggregating revenues.  What does that mean?  Revenues must be disaggregated according to the timing and qualitative information about how economic factors will affect the nature, amount, timing, and uncertainty of revenue and cash flows.  In addition to disclosing the timing, you must chose the other disaggregation categories that make sense to your organization.  Some common categories include:

  • Geographical regions
  • Service lines
  • Segments
  • Departments
  • Customer type
  • Contract type

Some of the items you need to consider for implementation are:

  • Which of these (or other) categories of disaggregation make sense for your business?
  • Who is responsible for determining the categories on which you are reporting?
  • Do you need to make updates to your system in order to track the categories of disaggregation?
  • Do you need to make updates to your system in order to track the timing (point in time versus over time)?
  • Who will update the accounting system to capture the information and when?
  • If not updated as of 1/1/2019, will you be able to get the relevant information needed prior to the systems update?  If not, who is and how are you getting the information prior to the systems update?

Entities should ensure that they have systems, internal controls, and procedures in place to accumulate the information required to satisfy these new presentation and disclosure requirements. 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.

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