Industry Alert: Greece Fiscal Crisis – Global Accounting Considerations

A number of companies in the Pharmaceutical and Life Sciences sector sell products within Greece that are ultimately paid for by the Greek government. Over the last few months, the financial stability of the Greek economy has been challenged and there have been questions about whether these companies will ultimately be paid for products sold to the Greek government.

In late May 2010, the Greek government announced a plan for repayment of its debt to pharmaceutical companies. Several accounting considerations for Pharmaceutical and Life Sciences companies arise as a result of this announcement , ranging from implications for currently outstanding accounts receivables to how to treat future sales of product to the Greek government. This technical alert provides considerations companies should review when determining the appropriate revenue recognition for sales to the Greek government both under IFRS and US GAAP.