As the deadline for the implementation of FASB and IASB’s new revenue recognition accounting standards draws rapidly nearer, some companies are beginning to panic and worry they’ve not done enough to prepare. Rest easy; there’s still time to make the needed changes before the new rules take effect, and “brute forcing” your revenue recognition plan is a valid short-term solution if you’re worried your company may not make it in time.
So how exactly should you go about brute forcing your revenue recognition plan, and what steps should you be taking immediately to prevent tragedy come January 2018, when the new standards take effect? Brute forcing is certainly not a permanent solution to your company’s problems, but you’ll find that, for now, it’s the best option to ensure you’re in compliance with the rules as you build a long-term strategy.
Arm yourself with the right tools
To accomplish a difficult task such as this, your company will need to arm itself with the right tools ahead of time. Briefing yourself on common brute forcing tips as the clock continues to count down will likely get your company started off in the right direction, and help you avoid countless simple mistakes that have tripped up others before you. Beefing up on the AICPA’s tips can help you avoid frequently made mistakes, too, especially if your company hasn’t done this before and is entering uncharted waters
Before you begin, you’ll need to determine how exactly you want to tackle this accounting problem. The most effective method is combining man and machine alike to better achieve your goals; highly talented human capital, mixed with machine learning capabilities and tried-and-tested tools like old-fashioned spreadsheets, will be needed if you intend to use brute force to overcome the rapidly encroaching deadline. Make sure your team is up to snuff now, and that your IT infrastructure is prepped to handle a sudden increase in its workload, lest they let you down during a critical moment right before a deadline.
You shouldn’t be shunning your IT experts when it’s time to make the difficult decisions, either; the importance of your technological tools during a last-minute emergency approach such as brute forcing your plan cannot be understated, and this deadline is simply too important to keep the decision-making process behind closed doors. An inclusive management team, then, should be one of your last steps before you set out to begin.
Brute forcing is far from the perfect solution to your problem; like all last-minute business endeavors, it comes with serious risk, particularly if it’s not being handled by your A-team. Be sure that all your employees, from your entry level staffers to your senior executives, are plugged into the process, and that all feedback is being taken into consideration so you don’t miss something small that will come back to bite you in the future.
Understand the limits of brute forcing your plan
Brute forcing your revenue recognition plan may be the only option for you now, but that doesn’t mean you should be relying on this tactic for future changes. Your company will need to establish a long-term solution to ensure it can readily comply with future changes to industry standards, lest you find yourself in a similar predicament a few years down the road. Consider launching a review process once the dust has settled, then, to determine why you got off to a late start and how you can avoid such hurdles in the future.
Quantifying the impacts of new standards will be incredibly hard to do on such short notice; your managers should take the appropriate steps to ensure your workers aren’t overly stressed from the burden you’re placing on them. Rushing a plan such as this will lead to numerous complexities you’re unable to detect now, too, so ensure you have a rapid-response team in place to handle any sudden disasters that may strike as you’re finalizing your plan.
These new rules go far beyond accounting – they could very well result in a fundamental shakeup to how your business operates. Keep that in mind as you skate by the deadline by the skin of your teeth, and be prepared to dedicate the extraordinarily large amount of resources you may need to splurge on to meet the January deadline.
Achieving near-term compliance is obviously a must unless you want your company to fall afoul of the new standards, but the importance of not keeping your eye on long-term reforms that are desperately needed cannot be understated. Brute forcing your revenue recognition plan may work for now, but it’s a shoddy strategy to rely on again in the future, and could cost your company seriously if handled inappropriately. Don’t fret, however; now that you know the challenges of brute forcing your plan, you’ll be off to a better start when it comes to preparing for new standards in the future.
Gary Eastwood is a CPA licensed senior accountant from Seattle, Washington. He received his CPA license from the Washington State Board of Accountancy in 2001 before relocating to Onawa, Iowa in 2008. Over more than 15 years of accounting experience, Gary has worked with multinational health service providers and independent CPA firms. He has a proven ability in dealing with business clients from a variety of backgrounds as well as leading companies to greater efficiency and profitability. He is familiar with both US GAAP and China GAAP.