Advice and Information for Finance Professionals

New Revenue Recognition Guidelines: What Should I be Doing?

Nigel Youell
Senior Director

Part 5 of a 6-part series

When considering the introduction of the revenue recognition guidelines, begin as soon as possible. Don’t wait until the “mandatory” date to address the new guidelines; it will be too late. Here are the typical stages that we see organizations going through as they prepare for the new guidelines:

Stage 1: Study the impact and determine strategy

  • Define the procedures for assigning value to a contract’s performance objectives
  • Realistically analyze your accounting subsystems
    • Can they easily be tweaked to accommodate the new revenue recognition guidelines?
    • Will major systems need heavy modification or replacement? If so, what are the options? 
    • Do you have the resources to retrofit on-premises systems? Will it require outsourcing? 
    • Would a cloud implementation provide a quicker and more financially prudent solution?

Stage 2: Identify the reporting information required by external and internal stakeholders

  • Determine the impact that the new guidance will have on existing contracts
  • Consolidate the historic impact under new guidance
  • Prepare reports to illustrate and differentiate revenue under new and prior revenue reconciliation methods

Stage 3: Implement the required accounting subsystems changes

  • Configure accounting rules and set up ledgers
  • Modify or install the accounting subsystems
  • Process and report using dual accounting

Stage 4: Transform the business

  • Communicate the impact of the changes to the business 
  • Train the organization to apply the new revenue recognition guidelines
  • Report using new revenue recognition guidelines

But how are you going to manage these stages? How do you begin? Part 6 of this series, “How will Oracle’s experience help?” provides some advice.

New Revenue Recognition Guidelines Series:

Part One: Like It Or Not, They're On the Way

Part Two: What Are the Guidelines and Examples?

Part Three: Who is Affected?

Part Four: What Challenges Do the New Rules Present?

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