One commentator in a recent Forbes business article states that any company in the United States that has “even moderately complex customer contracts” (that certainly applies to legions of California enterprises, both public and private) needs to be paying attention to huge accounting changes that are on the near horizon.
That means close attention, because the clock is ticking away toward a fast-approaching deadline pursuant to which many companies across the country will have to made great strides to meet.
Here’s the deal: Although there are standards in place both domestically and internationally to denote when businesses recognize revenue for tax, investment and other purposes, regulators do not consider them to be sufficiently aligned or optimally workable, especially when it comes to companies that provide goods and services over time. Forbes notes that “revenue recognition can be very complex for organizations that render services over a longer period,” resulting in lack of consistency for an industry and leaving regulators, investors, tax authorities and other scratching their heads and searching for clarity.
The perceived need for change — that is, greater consistency — has led to concerted action being taken by two major accounting standards boards (one in the U.S., the other a global entity). As Forbes notes, a major thrust driving change is a goal “to harmonize U.S. standards and international standards.”
A “single platform,” notes one financial principal, will be more beneficial for accounting outcomes.
Reportedly, there will be much work to do to prepare, ranging from the implementation of new software to the testing of new systems and what Forbes notes are additional activities “that may not be within the accounting background or skill set of many technology personnel or firms.”
An affected company might reasonably wish to consult with a proven law firm having experience helping business entrepreneurs and executives plan for new opportunities and challenges. Seasoned business attorneys can help company principals timely respond to new regulatory rules and processes, as well as make appropriate referrals to other business professionals who can also centrally assist.