Revenue recognition: Effectively managing accounting change

Companies that generate revenue and apply US GAAP or IFRS are currently adapting to a new five-step model to recognize revenue from customer contracts. The change resulted from newly converged standards released by the FASB and IASB in 2014, which replace nearly all existing US GAAP and IFRS guidance. Significant management judgment on accounting for revenue recognition will now be required, and the changes will have pervasive impacts on people, policies, processes and systems.

The new revenue recognition standard takes effect for most companies in 2018, but the time to act is now. For companies choosing the retrospective option for adopting the new standard, the transition period has already begun. Companies are finding that circumstances such as tiered pricing, marketing offers (including volume discounts), contract modifications and a host of other potential contract terms are creating issues that require careful consideration under the new standards.  

Steps to performing an impact assessment


Implementing a phased approach

PwC suggests applying a phased approach to this transformational change (see diagram). You’ll need to consider program management, organizational change management, potential systems modification and/or implementation, and accounting oversight. PwC can advise and assist with the entire conversion process, and we have developed a suite of project enabling tools to help facilitate that process. 


Joe Tort
Tel: +1 (646) 471 0603
Shane Foley
Tel: +1 (646) 471 0516
Chad Kokenge
Tel: +1 (646) 471 4684
Hal Houser
Tel: +1 (646) 471 5470
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