It's the type of situation no modern company wants to be in: Adopt new business models to expand revenue; become mired in an even larger web of regulations—including the new revenue recognition accounting standard.
With more serious penalties at stake, better compliance and good revenue management are essential. But companies face greater complexities from new standards as well as consumer demands like new billing modes and stronger information systems. The extent to which they can adopt more robust practices in compliance and internal controls is a growing challenge.
This IMA survey, sponsored by FinancialForce, explores how companies are reassessing their revenue management in light of evolving revenue streams, customer demands, and accounting rules.
- Overall, 30% of the respondents, and about 50% of those who studied the standards, said the new revenue recognition standards would impact their company.
- Although almost half of the respondents did not think their firms currently fall under the new GAAP revenue recognition guidelines, the majority also said they had not yet assessed the new standards.
- Firms appear to be resistant to changing their recognition practices, but customer demand has the most impact in influencing management decisions.
- Dealing with the heightened risk of noncompliance requires top management support, staff expertise, and potentially new technology solutions.