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Revenue Recognition

Are you ready for both EITF 08-1 and 09-3 amendments that are to be applied prospectively to new or materially modified revenue arrangements in fiscal years beginning on or after June 15, 2010. These are significant changes to Revenue Recognition.

Answers

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

I was at a Proformative/Netsuite/Deloitte/Protiviti event on this subject last night and it was scary. For companies subject to the new reporting requirements, if you are not already well on your way to implementing a solution, I think you will be in big trouble. The amount of variability in how you regognize is now variable in far more ways than ever before and, as was noted many times by the great speakers, you can't do this in Excel. I don't know how SMBs are going to be able to handle this in any sane fashion.

BTW, I see that they created a Rev Rec group here and they posted the presos from last night. I highly recommend checking them out.

Arnold Sidun
Title: Controller
Company: In-Between
(Controller, In-Between) |

I attended I believe that same seminar in East Palo Alto, CA., which prompted my question. I liked both presentations Joe Talley's, Partner Deloitte - EITF 08-1 and 09-3: Reporting Implications and Revenue Recognition Roadmap and Revenue Recognition: Beyond the Numbers presented by Steve Hobbs Managing Director Protiviti, for me they helped guide me through processes that are needed, necessary and in one case obviously worked.

If we look back on VSOE and TPE, we have always had a difficult time, ESP helps that process. Even though we have to use VSOE and TPE if we have them. I think that establishing ESP over the long haul will be more "user friendly". Quite frankly I like the idea of the demise of the excel spreadsheet.

Over the past 9 years my career has taken me down the Interim Controller Contractor path. You have no idea how difficult it is to provide your client with good reporting using these spreadsheets. If Mary or Joe set them up 2-3 years ago and Harry made adjustments to them last year, here you are today, trying to figure out how they set up the math to arrive at what they did.

You then have to reset everything and hope that you have done a good job and have taken into consideration all the previous calculations, allocations, etc.

The amendments are scary yes, future possibilities with software like, NetSuite, Intacct etc., all of our jobs in this area will be better for it. I believe these amendments will drive that uplift to better reporting and better management of the Revenue Recognition Process.

I believe that we will be able to catch up, if we get the right software to support the amendment requirements. Otherwise, I agree that this changeover, will take a considerable amount of time and manpower to accomplish.

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

https://www.proformative.com/og/revenue-recognition

Stephen Helfrich
Title: CFO/Consultant
Company: In Transition/Consulting/Interim CFO
(CFO/Consultant, In Transition/Consulting/Interim CFO) |

Thanks for posting the slides, they're very helpful.

Konrad Sosnow
Title: Revenue Recognition Guru
Company: Konrad M. Sosnow & Associates
(Revenue Recognition Guru, Konrad M. Sosnow & Associates) |

EITF 08-1 will help to conform accounting Rev Rec rules to business rational. Why defer revenue because your VSOE study has a too small sample or too large spread? True, there will be a lot more work to do to perform VSOE studies for all deliverables, establish ESP processes, and working with marketing to establish ESP where VSOE does not exist.

The idea is to have the revenue reported in the financials more closely reflect economic and business reality.

Konrad

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

Does anyone have a process document for creating ESP values that their auditor has liked?

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