Question

Find an article from a business or accounting journal or the wall street journal that concerns accounting.

Summarize the concepts presented in the article.

Please post the link to the article

Answer 1

Article on : Complying with New Accounting Standards with Consistency

New concept have been evolved these days which is the New Revenue Recognition & the IFRS standards. Companies are implementing these concepts these days to recognize revenue. Whether organizations are working through their first of implementing the new revenue recognition standard the compliance function can play an important in helping bring consistency, effective communication, risk mitigation to the processes. The impact of new accounting standards starts with accounting but permeates many aspects of the business from compliance to internal audit. The issues can be challenging with respect to business activities such as revenue recognition & leasing. The new revenue recognition standard which went into effect at the beginning of 2018 for many companies called for breaking down legacy & replacing with principle based framework.

The potential effects of the cost guidance added with revenue recognition could have on compensation & how the compliance function may be able to address those impacts. There is an aspect of standard that requires organizations in certain situations to defer certain costs associated with a revenue contract. Example: commission. Depending on when the compensation payment is triggered the related cost can either be capitalized or expensed. Additionally, making sure revenue from contracts is recognised consistently across the enterprise & not being modified to produce a certain accounting outcome. As a result organizations may be able to identify potential non compliance issues before they occur. Under the former revenue recognition standards there might have been fewer oppurtunities for accounting treatment inconsistencies within an organization because the rules based approach did not provide as many instances where management bias could impact revenue recognised as the new principles based approach. But in applying the new standard consistency matters not only from a compliance perspective but from an operational effectiveness as well. The business benefits of consistency across an enterprise include the adoption of more discipline around what customer contracts look like & in turn a more uniform way for the company to go to market.