Читать книгу Revenue Recognition - Renee Rampulla - Страница 53

The following are few considerations for management when identifying a contract with a customer:

 Is there a formal or informal policy in place to approve and modify contracts with customers? Does that policy differ based on contract types?

 Are there controls around both the approval and modification of contracts with customers?

 Is there a need to engage expert legal advice to determine whether a contract with a customer is legally enforceable and/or has commercial substance?

 At the inception of the contract, how has management determined that they will collect substantially all of the consideration they are entitled to?

 How does management identify contracts that should be combined?

 Has management elected the use of the portfolio approach? If so, how did management determine which contracts with customers have similar characteristics?

 Can the judgments and assumptions used when identifying a contract with a customer be supported and are they documented? Is that documentation and support sufficient enough for the company’s auditors?