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When we last checked back in December on disclosures about adopting the new accounting standard for revenue recognition, things looked less than great.

Yes, some filers had started to disclose how the new standard might affect their accounting policies and financial reporting—although the common refrain seemed to be “we are still evaluating potential effects” without much more detail. Such words did not inspire confidence.

So we decided to take a fresh look at what companies have disclosed since then. After all, the new revenue standard will be a huge change to corporate accounting, and it goes into effect on Dec. 15. That’s less than eight months away. By now, the accounting gurus say, filers should be nearly done—if not finished—with all the changes to accounting systems, accounting policies, internal controls, and investor relations outreach that you’ll need to do.

In the financial statements themselves, you typically find disclosure about the new revenue standard under “Accounting Changes and Error Corrections” or “Accounting Policies,” plus the occasional guest appearance in Management Discussion & Analysis or an earnings release.

In the Calcbench databases, you can search for those disclosures on the Interactive Disclosure database. In the text field on the right-hand side, search for “ASU 2014-09,” the formal name of the Financial Accounting Standard Board’s new revenue standard; or “SAB 74,” another common way to describe the new standard. (You could also search for “revenue recognition” but that will return all the disclosures a company might make about current revenue recognition issues, too, not just implementation of the new standard.)

Anyway, the excerpts (all from the S&P 500, in their fourth-quarter 2016 reports):

  • Fluor Corp. Management is currently evaluating the impact of adopting ASU 2014-09 … [Adoption] is expected to affect the manner in which the company determines the unit of account for its projects (i.e., performance obligations). Under existing guidance, the company typically segments revenue and margin recognition between the engineering and construction phases of its contracts. Upon adoption, the company expects that the entire engineering and construction contract will typically be a single unit of account (a single performance obligation), which will result in a more constant recognition of revenue and margin over the term of the contract. The company will adopt ASU 2014-09 during the first quarter of 2018. The company expects to adopt this new standard using the modified retrospective method that will result in a cumulative effect adjustment as of the date of adoption.

  • Philip Morris International. PMI plans to adopt ASU 2014-09 on January 1, 2018, and does not expect the adoption to have a material impact on its consolidated financial position or results of operations. Following the release of ASU 2016-12 in May 2016, which provided some practical expedients to the original standard, PMI is continuing to assess the standard’s policy election for gross versus net presentation of excise taxes and, related to this assessment, the method of adoption.
  • CF Industries. We are analyzing the impact of ASU No. 2014-09 on our revenue contracts by comparing the revenue recognition that would have occurred from applying this ASU to revenue contracts that existed in 2015 and 2016. We are also reviewing our accounting policies and disclosures to determine changes needed to comply with this ASU, as well as identifying changes to our business processes, systems, and controls needed to support adoption of this ASU.
Fluor doesn’t say whether it expects the new revenue standard to result in a material change to its financial position. Other than that, however, the company offers thoughtful discussion about how the standard will change recognition for its typical transaction. That gets closer to the sort of disclosure that SEC officials have been bugging companies to make for several quarters now.

PMI is also an interesting case. If the company is correct in its assessment that the new standard will have no material effect, that’s great. On the other hand, if PMI (or any other company) says the standard will have no material effect and is later proven wrong—that suggests your internal control over financial reporting didn’t work like it was supposed to. Some companies in that predicament might end up with a comment letter from the SEC inquiring about your past homework. (Shameless plug here for the Calcbench ability to search SEC comment letters, too.)

As always, you can narrow your search to companies most relevant to you, and then search that smaller group for footnote disclosures about ASU 2014-09 or SAB 74. Then you can export the list of disclosures (yes, the actual text) as a Word document or an Excel spreadsheet.

We’ll follow up again on revenue recognition later this summer. Eight months and counting!


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