Recent reporting changes for revenue recognition — which have been called one of the biggest compliance changes for business since Sarbanes-Oxley — go into effect for publicly traded companies on January 1, 2018, and expand to privately held companies in 2019.
The changes, known as ASC 606 and IFRS 15, represent a massive transition. The penalties for non-compliance could be heavy, and most companies are strategically approaching talent acquisition to ensure sufficient resources to enact changes by the deadline.
Do you have a plan in place? Do you have adequate resources for implementation? Is your talent acquisition strategy as cost-efficient as it could be?
To help you find out, we talked to Aston Carter Divisional Practice Leader Joe DiBernardo. His team specializes in project-based talent management, including ASC 606 consulting, and he recommends a variety of useful hiring strategies to maximize revenue recognition efficiency for his clients.
For companies implementing the new revenue recognition guidance, current accounting staff may be able to handle the lion's share of the extra work imposed by the ASC 606 adjustments. However, bringing in an outside partner may be the most effective way to structure and guide your plan’s execution.
DiBernardo explains, “Project or team leadership resources can be a benefit to clients who have an ASC 606 transition plan but need help on the implementation side. From the subject matter expert to the accounting manager, external support can extend a company’s capabilities by supervising consultants or in-house staff on the project.”
Supplementing current resources with expert consultants can add a key layer of knowledge and responsiveness to your company’s ASC 606 efforts, and ensure all changes are implemented correctly and by the deadline.
If your organization is relying on your auditing partner for ASC 606 implementation, you may be better served by adjusting your talent acquisition strategy to maximize cost efficiency.
“Project or operational support can fill a big need for organizations that just need to get their plan up on its feet by the deadline,” says DiBernardo. “Supplementing and back-filling your current boots-on-the-ground operational staff can be a cost-effective way to free up project oversight resources at the senior and staff level. There can be tremendous value in working with a firm like Aston Carter that specializes in this level of financial and accounting support.”
If you diversify your staffing support to service each area of need, you’ll manage the transition with a minimal drain on the operational resources you need for day-to-day activities.
Private companies, which need to be compliant in 2019, have more time to review internal resources and create an implementation plan.
“Some companies need highly technical revenue recognition consultants who assist in planning and strategy, some need project management professionals who oversee responsive implementation, and some need the operational support to actually enact the changes,” notes DiBernardo. “Others might need all three at once.”
Another big regulatory change is just over the horizon. A new lease accounting model known as ASC 842 was enacted by the Financial Accounting Standards Board in 2016 and is set to take effect for public companies on January 1, 2019 and one year later for private companies.
DiBernardo says, “It’s somewhat of a perfect storm. Not far beyond ASC 606, companies will also have to address all of their fixed asset leases with ASC 842. So whereas accountants generally sprint during their month in quarter and year-ends, this entire year they're going to be consistently sprinting.”
Depending on your company’s contract and asset structures, you may find additional efficiencies at the confluence point of these two wholesale transitions to accounting practice. Why not leverage the cohesion of your ASC 606 support team to build a framework for your approach to ASC 842? Or, you could take another approach: bring on a talent acquisition partner to ease the burden of typical accounting challenges, so that your in-house team can focus on a clean regulatory transition.
Regardless of how your company is approaching these changes, this year’s demand for accounting and finance resources is unlike any since SOX. As you and your company move through the adjustment process, take time to ask if you’ve done all you can to be proactive and make the best use of your time, money and resources.
Want to learn more? Contact Aston Carter now.