This course is designed to provide an overview of the technical guidance and outline the five steps involved in the revenue recognition model.
This session is the beginning of a series on the new revenue recognition standard. The standard outlines five steps for proper compliance. On the surface, these steps seem simplistic. However, there are many considerations that should be considered within each step based on your process and industry. This course is designed to provide an overview of the technical guidance and outline the five steps involved in the revenue recognition model. We also explore some concepts to consider within each step and then evaluate some challenges that specific industries may have when complying with the standard. Future courses will further delve into each step and provide examples and scenarios that should be considered to properly apply the step.
On May 28, 2014, the FASB completed its Revenue Recognition project. It issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance establishes principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers.
The standard affects all entities (public, private, and not-for-profit) that have contracts with customers. Exclusions include: • Leases accounted for under FASB ASC 840, Leases; • Insurance contracts accounted for under FASB ASC 944, Financial Services—Insurance; • Most financial instruments, and guarantees (other than product or service warranties).
Transaction and industry-specific revenue recognition guidance are eliminated. It is replaced with a principle-based approach for determining revenue recognition. The new standard requires significantly more disclosure than previous GAAP.
Resources Consulted: • ASC 606-10-32-15 to 32-20, 55-244 to 55-246. • ASU 2014-09: “Revenue from Contracts with Customers.” BC229-BC247. • Croner-I, “A14 Revenue from Contracts with Customers.” (2019). Section 7.4.2-2 and 7.4.2-2. • FASB, ”Revenue Recognition Implementation Q&As.” January 2020). Questions 31-37. • FASB TRG Memo 20: “Significant Financing Components.” 26 January 2015. • FASB TRG Memo 30: “Significant Financing Components.” 30 March 2015. • EY, Financial Reporting Developments: “Revenue from contracts with customers.”January 2020. Section 5.5. • KPMG, Handbook: “Revenue Recognition.”December 2019. Section 5.5. • PWC, “Revenue from contracts with customers” March 2020. Section 4.4. • https://www.revenuehub.org/
Field of Study: Accounting
Lynn Fountain has over 45 years of experience spanning public accounting, corporate accounting and consulting. 24 years of her experience has been working in the areas of internal and external auditing. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance. Ms. Fountain has held two Chief Audit Executive positions for international companies. In 2011, as the Chief Audit Executive for an international construction/ engineering firm, she was involved in the active investigation of a joint venture fraud. The investigation included work with the FBI and ultimately led to indictment of the perpetrators and recovery of $13M. Ms. Fountain is currently engaged in her own training and consulting business and is a regular trainer for the AICPA. Ms. Fountain is the author of three separate technical books. “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations” was published by the Institute of Internal Auditors Research Foundation. -“Leading The Internal Audit Function” and -“Ethics and The Internal Auditor Political Dilemma” were published by Taylor & Francis In addition Ms. Fountain was a contributing author to the certification program exam for the National Association of Accountants. She also has certificate programs on various on-line platforms. Ms. Fountain has performed as an adjunct instructor for the School of Business for Grantham University and developed the first internal audit curriculum for the School of Business at the University of Kansas. Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CGMA, CRMA credentials and CPA certificate (non-active).
