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Connor Group and RevenueHub have released a study of recent SEC SAB 74 disclosures that are being made by US public companies regarding their upcoming adoption of Accounting Standards Codification (ASC) Topic 606, the new revenue accounting standard effective for public companies starting in 2018, and its international analog IFRS 15. SAB 74 is requirement by the SEC staff for public companies to discuss the impact of the adoption of recently issued accounting standards in their quarterly and annual financial statements.
At this time, the study finds almost 90% of companies indicate they have not yet completed the assessment the adoption of ASC 606 will have on their financial statements. Most of the remaining companies are the ones that were able to conclude the adoption is not expected to have a material impact; among them, Netflix, Whirlpool, Kimberly Clark and Chipotle.
Just four companies (among them, Microsoft and Ford) from those reviewed announced they anticipate to adopt ASC 606 early. Over 80% of the companies are currently unable to indicate whether they will use the full retrospective or modified retrospective method for transition to ASC 606; the remaining companies split approximately equally between the two available methods.
The study, which was based on recent annual and interim report SEC filings by 149 companies, also includes example SAB 74 disclosures from several companies, including Microsoft, Omnicom, Starbucks, United Airlines, United Technology, Orange, and several other.
About Connor Group (www.connorgp.com). Connor Group is a specialized professional services firm of Big 4 alumni and industry executives. With a team of big brains helping financial executives with their most complex and significant matters, including Financial Accounting and Operations, IPO Services, and M&A Services, we serve our clients who are among the world’s top growth companies.
About RevenueHub (www.revenuehub.org). RevenueHub publishes plain-English articles and example-based case studies that explain the major aspects of the new revenue recognition standard. We also compile resources from the SEC, FASB, TRG, and major accounting firms: providing one place for accounting professionals to find relevant revenue guidance and improve their understanding of the new revenue standard.
Download full study here: CG – ASC 606 Disclosures Methods Dates Impact (Jul 2016)