Some CFOs are adjusting business operations to comply with revenue-recognition guidelines
By Tatyana Shumsky
June 12, 2018
New accounting rules are prompting some corporate finance chiefs to change how they do business.
More than half of the S&P 500 companies disclosed some impact on their accounting policies since December, when new rules unified how companies account for revenues from sales and services. The change, which was in the works for more than a decade, replaces previously disparate, industry-specific rules and aligns U.S. standards closer to international guidelines.
For finance chiefs of some companies, including Red Hat Inc., RHT -0.49% Ciena Corp. CIEN 0.86% and Mosaic Co. MOS -0.07% , adopting the new revenue recognition standard from the Financial Accounting Standards Board means adjusting their business operations to be in line with the new accounting framework, which is more focused on contracts and when goods and services are delivered to customers.
Around 380 companies in the stock index have reported under the new rules as of June 8, and 294 companies in the index disclosed an impact on financial statements from adopting the standard, according to Audit Analytics.
Finance teams spent months rewriting accounting processes and procedures and preparing new financial statements to comply with the new rules. Roughly one in five public companies surveyed by PricewaterhouseCoopers LLP said they spent or expected to spend $1 million or more on this effort.
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