New accounting standard could change how you look to banks and investors
The new FASB revenue recognition standard takes effect for all calendar-year private companies in 2019. It’s predicted to have significant impact on companies in the technology sector. You should be planning for implementation now.
The standard not only may affect the timing and amount of revenue recognized, it could create new assets and liabilities – impacting loan covenants and other financial ratios. Your financials may look different and will require more disclosures. New processes and controls will be required to properly account for and disclose revenue from contracts with customers.
The standard became effective in fiscal 2018 for publicly-traded companies. It has had massive impact on some companies and little impact on others. Certain technology companies have experienced a significant impact, due to complexities in technology and customer licensing agreements.
If you have any questions regarding the effects of the new standard on your business,
please contact an LWBJ audit professional.