Incentive compensation — impact of new revenue accounting rules

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07/13/2014 by Human resource services
Incentive compensation — impact of new revenue accounting rules

At a glance

Potential impact of new revenue accounting rules on incentive compensation plans and how employers can begin to prepare.

​The US and international accounting rule-makers, FASB and IASB, recently released new standards on revenue recognition. Under the new rules, which apply to all companies in all industries around the globe, the period or pattern in which revenue is recognized could be vastly different from today’s regime.
 
As employee compensation arrangements tied to revenue generation, especially for salespeople, have become increasingly common and complex, it is likely that the changes in revenue recognition will impact many of these arrangements. This Insight focuses on the potential impact on performance-based compensation programs, and what companies can begin doing to prepare.