GAAP Flash – ASC 842, Audit Quality, and ASC 606 – 08.04.17
GAAP Flash – ASC 842, Audit Quality, and ASC 606 – 08.04.17

GAAP Flash – ASC 842, Audit Quality, and ASC 606 – 08.04.17

This week’s GAAP Flash includes articles about implementation of the new leasing standards (ASC 842), Apple’s delay in reporting under the new revenue recognition standards (ASC 606), key factors influencing audit quality for single audits, and the importance of a progressive, positive culture in the workplace.

Executives fret over lease accounting standards(July 31, 2017) – Accounting Today (@AccountingToday)

The December 15, 2018 effective date for the new leasing standards is getting closer! New polling shows that nearly 50% of corporate executives are concerned about their corporation’s readiness to apply the new standards. FASB allotted a three-year window to prepare for the changes. However, companies are finding the scope of data collection, decision making, and system implementation are more intense than anticipated. Polls done by the Big Four show that in the past year, organizations have realized that compliance with the standards is not as easy as expected, and they are now less likely to adopt the standards early.

How It’s Relevant: Compliance with the new leasing standard is not a quick and easy process! Affected leasing activities need to be identified, decisions need to be made, and procedures need to be set up to property account for activities going forward. Before any of this can materialize, it is vital to have an in depth understanding of the new standard! We have blogs and numerous resources available. As always, feel free to contact us with any questions you have!

Apple changes tune on new revenue-recognition rules (August 2, 2017) – MarketWatch (@MarketWatch)

Apple has announced that they will begin reporting their financials using the new revenue recognition standards (ASC 606) beginning in January 2019, and will implement retrospective reporting for 2018 results. Last October Apple announced they would begin reporting income under the new standard by January 2018. So what is the reason for the delay? So far, they have declined to comment on the reasoning, but we do know that the new standard will significantly affect Apple’s method of accounting for revenue.

How It’s Relevant: Apple insists that there will not be a material impact on the amount and timing of their revenue under ASC 606. However, a substantial part of the new revenue recognition standards relate to transactions in which Apple regularly engages. The standard outlines changes in the timing of revenue related to licenses, bundles of hardware and software, subscription services, gift card revenue, and third party digital content! Accounting for the changes is a massive undertaking, especially for such a large company. It is not surprising they are running behind, as are many other companies scrambling to prepare for ASC 606. Make sure you know what to expect by checking out our resources on the new revenue recognition standards!

Tactics for driving quality in a single audit (July 31, 2017) – Journal of Accountancy (@AICPA_JofA)

The AICPA Peer Review Team conducted a study that revealed three key factors which contribute to audit quality in “single audits” (audits of governments, not-for-profits, higher education institutions, and Indian tribes who expend $750,000 or more in Federal assistance). It was found that a firm that performs more single audits has a higher conformity rate, regardless of firm size. Firm membership in the GAQC (the AICPA’s Governmental Audit Quality Center) has a positive impact on audit quality. Finally, if the engagement partner performed 11 or more single audits in a year, there are fewer instances of nonconformity.

How It’s Relevant: Some of the conclusions make perfect sense – more experience, better results! These findings support numerous recommendations by the AICPA to perform more accurate audits. As auditors, we must do everything in our power to complete our work accurately and in compliance with standards. Our audit quality course is a great way to prepare your team to perform top notch audits! The more you know!

Three things that aren’t in your firm’s culture (July 31, 2017) – Accounting Today (@AccountingToday)

All organizations have a culture. These cultures may be intentional or accidental, and historically little attention has been dedicated to influencing them. However, in recent years firm have taken steps towards fostering a more attractive work environment! The article suggests three ways to promote positive work environments: treating staff like family, work hard and play hard, and valuing work-life balance.

How It’s Relevant: In this day and age, we spend a significant amount of time with our “work family.” For a company that truly values their employees, it is important to create a positive work environment. Studies show that when an employee feels appreciated and happy in their job, they work harder and are more productive! And GAAP Dynamics really knocks it out of the park! There is a progressive work-life balance within our upbeat, close-knit group. Lucky for you, we are currently hiring! Reach out to us to hear more about our open positions and amazing benefits.

Disclaimer
This post is published to spread the love of GAAP and provided for informational purposes only. Although we are CPAs and have made every effort to ensure the factual accuracy of the post as of the date it was published, we are not responsible for your ultimate compliance with accounting or auditing standards and you agree not to hold us responsible for such. In addition, we take no responsibility for updating old posts, but may do so from time to time.

New Call-to-action
 
New call-to-action

Comments (0)


Add a Comment




Allowed tags: <b><i><br>Add a new comment:


Ready To Make a Change?

Cookies on the GAAP Dynamics website

To give you the best possible experience, this website uses cookies. By continuing to browse this website you are agreeing to our use of cookies. For more details about cookies and how to manage them, please see our privacy policy.