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Success Story - Revenue Recognition Impact Assessment

Assessing the impacts of new Revenue Recognition rules on a large, public company

Superior consulting services delivering successful technical accounting solutions

A publicly-held, global provider of healthcare equipment wanted to be confident in meeting the 2018 deadline to adopt the new Revenue Recognition accounting standard. With an already busy accounting organization and desiring external expertise, they came to Aventine Hill Partners' Technical Accounting team for help.

OUR SOLUTION

We provided a team consisting of a CFO Advisor and a Director of Accounting and Finance, both of whom had researched the new Revenue Recognition guidance and helped create Aventine Hill's assessment and implementation methodology. Working closely with the controller’s organization, our consultants created a customized approach that addressed the unique aspects of this company's global operations.

Because the new standard involves making judgments on how to apply principles-based guidance and rules, a governance process was established to engage stakeholders in a transparent and collaborative decision-making process. A detail project plan was agreed to so that the assessment could be completed efficiently. The tasks performed included: 

  • Analyzing and classifying the company's revenue streams to refine the scope of the project.
  • Reviewing and classifying a sample of customer contracts to target more detailed analyses. 
  • Analyzing individual customer contracts and identifying the performance obligations and transaction price in the contracts.
  • Performing detailed research and preparing whitepapers on unique issues requiring judgments in applying the revenue recognition rules.
  • Preparing pro-forma future footnote disclosures under the new guidance.
  • Recommending changes in terms for future customer contracts that would better support the company's business and accounting.

To wrap up the project and finalize alignment among the stakeholders, our team delivered a summary report that described the project activities; documented the key judgments made by the company; and detailed the bases for the company's conclusions.

RESULTS

With help of Aventine Hill's Technical Accounting team, this global company now understands the impact the new Revenue Recognition accounting guidance will have on its financial results and disclosures. Going forward, management can focus its accounting efforts on the categories of contracts that will be impacted by the new rules. The information gained from the project will be used to educate operational and sales personnel on best practices related to customer contracts; establish a central company-wide repository for customer contracts; and develop a roadmap to update the Company’s accounting software to enable it to produce the required disclosures.

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