Читать книгу Revenue Recognition - Renee Rampulla - Страница 6

Revenue is an important performance metric used by preparers, investors, lenders, and several other financial statement users to measure an entity’s past performance, financial health, and future prospects. Prior to the issuance of the revenue recognition standard, generally accepted accounting principles in the United States of America (US GAAP) lacked detailed disclosures about an entity’s revenue-generating activities and contained a wide variety of requirements and concepts for specific transactions and industries, sometimes resulting in different accounting treatments for similar transactions. Difficulty in applying revenue guidance was not limited to US GAAP; those entities using IFRS as their financial reporting framework also found challenges due to the limited guidance available.

Given the diversity, complexity, and importance of revenue, regulators heavily scrutinize revenue and the topic has been the subject of several fraud cases around the globe. Because revenue is so susceptible to fraud, auditors presume that a risk of fraud will exist and therefore revenue is specifically addressed in paragraphs .A33-.A35 of AU-C section 240, Consideration of Fraud in a Financial Statement Audit (AICPA Professional Standards).

In October 2002, FASB and the IASB (collectively referred to as the boards) initiated a joint project to develop a single principle- based revenue standard. This joint project, along with several other projects, were announced in a memorandum of understanding, commonly referred to as the “Norwalk Agreement.” To increase the usefulness of revenue information to users of the financial statements, this agreement included a discussion on the boards’ plans to

 remove inconsistencies and weaknesses in existing revenue requirements.

 provide a more robust framework for addressing revenue issues.

 improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.

 provide more useful information to users of financial statements through improved disclosure requirements.

 simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.

To learn more, consider referring to FASB’s revenue recognition section of their website at fasb.org.

Subsequent to the release of the Norwalk Agreement, and over the course of two years, the boards issued the following three exposure drafts for public comment:

 Revenue from Contracts with Customers, exposed on June 24, 2010.

 Revenue from Contracts with Customers (re-exposed), on November 14, 2011.

 Revenue from Contracts with Customers—Proposed Amendments to the FASB Accounting Standards Codification, exposed on January 4, 2012.

After three exposure drafts, numerous comment letters, and public outreach, on May 28, 2014, the boards issued joint accounting standards on revenue recognition addressing concerns regarding the complexity and lack of consistency when accounting for revenue transactions. Consistent with each board’s policy,

 the IASB issued International Financial Reporting Standard (IFRS) 15, Revenue from Contracts with Customers, and

 FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), whichamended the FASB Accounting Standards Codification® (ASC) by creating FASB ASC 606, Revenue from Contracts with Customers,added a new subtopic, FASB ASC 340-40,provided a principle-based framework for revenue recognition, andsuperseded FASB ASC 605, and either superseded or amended several existing revenue recognition requirements, including industry-specific topics within the FASB ASC 900 (Industry) sections.