Revenue Recognition: Lessons Learned From an Early Adopter!

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue for Contracts with Customers (Topic 606) which will replace almost all pre-existing revenue recognition guidance in legacy GAAP. Public companies must implement the new guidance no later than January 1, 2018 and other calendar year-end entities must implement no later than the year ending December 31, 2019.
 
A fortune 500 Company, General Dynamics, made the election to retrospectively transition to adopt ASC 606. As a result of their implementation of ASC 606, General Dynamics noted two impacts to their Form 10-K. Based on these impacts, they knew investors would have questions they would want answers to. General Dynamics had to determine how to answer investor questions before investors had the chance to ask. As a result, General Dynamics chose to add additional disclosures in their financials.
 
With impacts to financials and determining the best way to implement ASC 606, it is important for our clients to not underestimate the amount of effort it will take to implement this new standard. General Dynamics chose to develop a comprehensive change management project plan to guide them through the implementation process. How will your clients choose to implement the new standard and what ways could this impact the audit work for your engagement team? Read more at Revenue Recognition: Lessons Learned From An Early Adopter.  
 
Source: RSM US LLP. Used with permission as a member of RSM US Alliance. 
Strong Internal Controls Can Help Minimize Losses
 
According to a 2016 Association of Certified Fraud Examiners (ACFE) report, billing fraud accounts for nearly 28 percent of reported incidents victimizing construction companies, second only to corruption. Many small and midsize construction companies do not have the internal controls in place to prevent, detect, and respond to such events. The median loss for all cases in the ACFE study was $150,000; nearly one-quarter lost $1 million or more.
The most prominent organizational weakness contributing to fraud is the lack of internal controls. Whenever humans are involved, errors will always occur. Does your company have the necessary controls in place to help avoid unintended losses that result from error or outright fraud? Read more to find out steps your company can take at Strong internal controls can help minimize losses .
New Data Standards Set to Speed Surety Reporting

New technology is set to significantly impact construction finance reporting. The National Association of Surety Bond Producers (NASBP) and the Surety and Fidelity Association of America (SFFA) are working to develop a new online protocol that reduces input time and transcription errors on contractor work-in-process (WIP) reports. The roll-out of the new XBRL system is accompanied by four new standards from the Association for Cooperative Research and Development (ACORD): report of execution (on a bond), construction bond requests, commercial bond requests, and addenda for those forms.
 
Trials of the new system indicate a reduced input time on WIP reports from 30 minutes to approximately two seconds, with transcription errors all but eliminated. This follows an initial investment in coding time, which can be as little as eight hours. For contractors who submit dozens, or even hundreds, of reports each quarter, this offers a huge potential return on investment. Is your company ready to upgrade to the new reporting standards? Read more at Data Will Speed Surety.   
ABOUT OUR CONSTRUCTION, REAL ESTATE AND MINERALS INDUSTRY

Because Harding, Shymanski & Company, P.S.C. is committed to providing quality service to our construction, real estate, and mineral industry clients, we have selected a team of dedicated professionals to serve as your industry's consultants. These individuals understand the language and key issues unique to your industry and possess the drive and determination to help you manage your company on a proactive basis.
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We moved our accounting/tax business to Harding, Shymanski due to many positive comments we heard from our operating partners in the Illinois Basin...I would highly recommend any firm or individual involved in the production of oil and gas to consult with Harding, Shymanski's accountants. Their professionalism, attention to detail, responsiveness, and overall value are simply not available by any other accounting firm in the tri-state area.
 
- William D. Merrick, President
Midwest Energy Partners

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The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice.
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