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Connor Group has released an updated 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 the SEC requirement for public companies to discuss the impact of the adoption of recently issued accounting standards in their quarterly and annual financial statements. The original study was performed together with Revenue Hub in July 2016.
The updated study finds that 87% of companies still indicate they have not yet completed the assessment of how the adoption of ASC 606 will have on their financial statements. Many of the remaining companies are the ones that were able to conclude the adoption is not expected to have a material impact; among them, Pfizer, Whirlpool, Texas Instruments and Procter & Gamble. Conversely, United Continental, Dish Network, GE and Sprint expect a material impact.
Just four companies (Microsoft, Ford, General Dynamics and Raytheon) from those reviewed anticipate to adopt ASC 606 early. Over 90% of the companies are currently unable to indicate whether they will use the full retrospective or modified retrospective method for transition; the remaining companies split approximately equally between the two available methods. However, companies that anticipate a material impact of the adoption usually select the full retrospective method.
The study, which was based on recent annual and interim report SEC filings by 257 companies, also includes example SAB 74 disclosures from several companies, including Microsoft, Electronic Arts, General Dynamics, Microchip Technology, and AT&T.
Download Full Study here: asc-606-ifrs-15-disclosure-study-nov-2016
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.